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New York racinos' odds for success could lengthen with addition of new upstate casinos

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ALBANY, New York — Some New York horse tracks with video lottery machines could be facing longer odds with more casinos coming.

New York has nine tracks that feature rows of flashing lottery terminals that look like standard video slot machines. But these "racinos" can't offer the table games with cards or dice that up to four upstate New York casinos will be offering in a few years — and that has the industry bracing for harder times.

"Competition is good as long as it's fair," said Gary Greenberg, a minority owner of the Vernon Downs racino east of Syracuse. "But when you're putting up a racino that only has slots against a casino that has table games ... the casino is going to win."

Greenberg said the open question is how much business the new casinos will take.

A state siting board in December recommended licenses for a casino in the Catskills, the Finger Lakes and Schenectady, and bidding will reopen for another casino in the Southern Tier. This comes in addition to upstate New York's five Indian casinos and casinos in neighboring states.

Overall racino revenue was down slightly in 2014. But the numbers were helped by Resorts World New York City, which accounts for around 40 percent of the statewide net revenue. Subtract the massive moneymaker in Queens, and combined net revenue of the other eight racinos dropped by 4 percent in 2014.

Analysts believe competition in the Northeast, a harsh winter and a slow economy likely contributed to the lower numbers at some upstate racinos.

Now comes the potential for new upstate casinos poaching — or cannibalizing — customers. State officials said they rejected casino applicants close to New York City in Orange County for fear of cannibalizing existing downstate facilities, presumably operations such as Empire City Casino in Yonkers.

But critics say the same dynamics could play out elsewhere upstate.

The planned $425 million Lago Resort & Casino in the Finger Lakes will be built off the Thruway around 25 miles east of Finger Lakes Gaming and Racetrack. It also will be within a 90-minute drive from two other racinos, Vernon Downs and Batavia Downs Gaming, and the Oneida Indian's Turning Stone casino.

PHOTO: In this Wednesday, Jan. 14, 2015 photo, a woman plays a video lottery terminal at Saratoga Casino and Raceway in Saratoga Springs, N.Y. New York has nine horse tracks that feature rows of flashing lottery terminals that look like standard video slot machines. But these “racinos” can’t offer the table games with cards or dice that three or more upstate New York casinos will be offering in a few years. (AP Photo/Mike Groll)
In this Wednesday, Jan. 14, 2015 photo, a woman plays a video lottery terminal at Saratoga Casino and Raceway in Saratoga Springs, N.Y. New York has nine horse tracks that feature rows of flashing lottery terminals that look like standard video slot machines. But these “racinos” can’t offer the table games with cards or dice that three or more upstate New York casinos will be offering in a few years. (AP Photo/Mike Groll)

Lago projects that about half its first-year revenue would come from existing gambling operations in New York, with the rest new revenue for the state.

But Chris Riegle, president and general manager of Finger Lakes, contends the cannibalization would likely be higher, with one study saying a new casino would take 50 percent of his revenue. Riegle said the new casino to their east will force him to focus more on their primary Rochester-area market, which will pit Finger Lakes more against Batavia Downs.

"The net gain is almost nothing," he said. "All we're doing is shuffling business around."

Lago's operators contend the state will gain overall and that existing operations would likely improve their facilities in the newly competitive marketplace.

In eastern New York, Saratoga Casino and Raceway plans to build a 108-room hotel, a restaurant and meeting space as they prepare for new competition less than an hour south in Schenectady. Saratoga spokeswoman Rita Cox noted they will still have unique benefits for customers, even after dice start tumbling at Rivers Casino and Resort.

"It's definitely going to have a negative impact on us, but Saratoga is still Saratoga," Cox said.

Saratoga also will be helped by a provision in the casino expansion law that lowers its tax rate since it's in a region with a new casino. Finger Lakes will not get a similar tax break under the current law.

Saratoga was among four racino companies involved in bids for a casino. Only one, the operators of Monticello Raceway in the Catskills, have been successful so far.

Jeffrey Gural of Tioga Downs was passed over by state regulators in December, but he intends to take part in another round of bidding for one more new license in the Southern Tier. Gural, who also operates Vernon Downs, said the new casinos could affect one of his properties.

"No impact on Tioga," he said. "It's possible I'll get hurt at Vernon."


Associated Press writer David Klepper contributed from Albany.

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