POLITICS ON THE HUDSON

What does MGM have planned for Empire City Casino as Yonkers purchase nears?

Joseph Spector
Albany Bureau

ALBANY - MGM Resorts is expected to close in early January on its $850 million purchase of Empire City Casino and Yonkers Raceway.

But the gambling giant is keeping its cards close to the vest on its plans for the facility just 15 miles from Times Square.

Still, local officials said MGM is expected to pursue a hotel and theater, as well as other entertainment options as it hopes to land a full-scale gaming license from the state sooner rather than later.

"I’ve had a number of conversations with them. Clearly, they are very guarded about what their plans are," Yonkers Mayor Mike Spano said.

"That being said, they have said over and over again that they do have plans and that they’re huge plans."

The Las Vegas-based MGM will be making its first entry into the competitive New York gambling market as it builds a formidable Northeast presence after opening a $1 billion MGM Springfield in Massachusetts in August. It also owns the massive Borgata casino in Atlantic City.

Valet entrance at night at Empire Casino

But with Empire City, MGM gives itself the closest gambling operation to New York City and will compete with Resorts World, which owns the largest racino in the state at Aqueduct Racetrack in Queens and a $1 billion casino in the Catskills.

"This acquisition represents an excellent opportunity to further solidify our presence on the East Coast, and in particular, expand our reach into the high-density New York City region," Jim Murren, chairman and CEO of MGM Resorts International, said in a statement when the deal was announced in May.

The sale will end the 46-year ownership by the Rooney family of Yonkers Raceway that morphed into the video-lottery facility in 2006.

What's next?

MGM declined to comment about its plans in Yonkers as it awaits final approval of the sale from the state Gaming Commission.

A Jan. 3 closing date has been targeted, said Joe Faraldo, president of the state's Standardbred Owners Association who said he was recently briefed by MGM and Yonkers Raceway officials about the looming sale.

Neither Yonkers Raceway management nor the Gaming Commission would comment about the sale. Gaming Commission spokesman Brad Maione refused to release MGM's application to the state for the sale, saying it is not public.

At least parts of the application are clearly public and should be released, said Robert Freeman, executive director of the state Committee on Open Government.

"There may be elements of it that would fall in the scope of the so-called trade secret exception, but many elements of it, I’m sure, would be absolutely public," Freeman said.

MGM will need a state licenses for harness racing and simulcasting, as well as one to run Empire City, the state's second largest video-lottery facility.

Spano said he believes MGM will want to build a hotel and add an entertainment venue that has synergy with its 28 resorts across the globe.

Only half of the 97-acre property is developed.

"It’s a world-class entertainment venue, and it’s right here in our city, which is in the heart of the metropolitan area," Spano said.

"It could be really good for Yonkers because of the investment they can make because they have deep pockets."

The Rooney family had long sought to build a hotel and parking garage but was unable to put together the financial package to make it happen.

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MGM Resorts CEO James Murren, left, and MLB Commissioner Rob Manfred speak during a news conference at MLB headquarters in New York, Tuesday, Nov. 27, 2018. With MGM's purchase of Yonkers Raceway, sports betting could be in the cards.

Questions abound

MGM's purchase comes with myriad questions as the future of New York's gambling sector unfolds.

For one, MGM has been aggressive in landing gambling partnerships with Major League Baseball, the National Hockey League and the National Basketball Association.

The deals come after the U.S. Supreme Court in May allowed states to legalize sports betting. But the Gaming Commission in New York has yet to approve regulations to allow for sports betting.

The state Legislature in June was unable to reach a deal to let racetracks with video-lottery terminals offer sports betting.

So as state law currently stands, only four upstate casinos can offer sports betting when the commission finalizes the regulations.

MGM and other racetracks might be able to partner with the upstate casinos to allow sports betting, but the scope remains unclear.

Full casino license

Meanwhile, MGM is clearly buying Empire City with the hope it will land a full gaming license so it could install table games.

MGM, in fact, agreed to pay the Rooney family another $50 million if Empire City ultimately lands a casino license.

But state law currently prohibits the New York City metropolitan area from having full-scale gaming until 2023. Empire City has electronic table games, like blackjack and roulette.

A state law put a seven-year moratorium on casino expansion in New York, and the clock started March 1, 2016, according to the Gaming Commission.

The law was aimed at giving the upstate casinos a chance to succeed before the New York City area could get into the market.

Yet if MGM wants to expand, it could make the case to Gov. Andrew Cuomo and the state Legislature to drop the moratorium — or least give it an assurance it will get one of the three remaining casino licenses.

Sen. Shelley Mayer, D-Yonkers, said she has yet to be briefed on MGM's plans but would be willing to consider a change in the law after she talks to the company.

"When they come to us with their plan, I’m going to evaluate what they need to achieve the maximum benefit not only for MGM, but the community," she said.

Spano said a gaming license would be key for MGM in Yonkers.

"Obviously, they want full gaming," Spano said. "So do I. Full gaming is a must for us to get the true entertainment value out of Yonkers Raceway because if you have full gaming, you’ll have better revenue, which is better paying jobs."

The facility is the city's largest employer with about 1,200 jobs. It also pay about $7 million a year to the city in taxes and agreed in October to pay the city a $7 million to $8 million real estate transfer payment.

The Empire City Casino in Yonkers as seen from a drone on May 29, 2018.

Future of racing

MGM's purchase may also renew questions about the future of harness racing at the track, which first opened in 1899.

Faraldo, the head of the horsemen association, in recent years has supported the idea of moving the track to Belmont Park, the New York Racing Association's thoroughbred track on Long Island.

If the track was moved, MGM would still pay a portion of its video-lottery revenue to the horse owners and for racing purses, but it would be able to redevelop the track land as part of the casino operation.

Faraldo also thinks the move would go along with moving NYRA's Aqueduct Racetrack in Queens to Belmont, freeing up land for the Genting-owned Resorts World at Aqueduct.

"I would anticipate that they (MGM) may want to see that happen because it would be good for Genting at Aqueduct," Faraldo said, saying he talked to MGM at his meeting with company executives about his proposal. 

"It would be good for NYRA to operate two instead of three tracks, and be shovel ready to go at Yonkers and at Aqueduct if and when a casino legislation came down the pipe."

But NYRA and state officials haven't shown much interest in his idea, although there is the potential of considering other sites for the track.

In a statement, NYRA said Yonkers Raceway officials had inquired "in the past" about the move to Belmont, but NYRA found it would not work.

"NYRA studied the issue, consulted with relevant architects and experts and concluded that there would not be adequate space to allow for the construction of a new harness track anywhere at Belmont," NYRA spokesman Patrick McKenna said.

"NYRA communicated our findings to Yonkers many months ago, and there have been no additional discussions since then.”

Meanwhile, MGM has shown a commitment to horse racing, which had not been part of its portfolio. MGM is also in the process of buying Hard Rock Rocksino outside Cleveland, which also has a harness track.

MGM needs to keep the horse racing in order to keep its license to have video-lottery terminals, per a 2001 law.

Faraldo said MGM has agreed to extend its contract with the horsemen for two more years, until June 2021.

"They asked me what my concerns were and I said, ‘That you guys are coming in here just to get rid of us.’ That’s what my horsemen’s concerns are," Faraldo said.

He said he told MGM officials, "I don’t buy it because at least you guys were good enough to extend our contract for another two years."

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