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Saturday, May 18, 2013

No Table Games at Vernon Downs - Best Thing Possible

The State of New York has entered into an agreement with the Oneida Indians which requires the Tribal Authority to pay 25% of the net profits of their Turning Stone Casino to the State of New York (roughly $50 million annually) in return for a monopoly on casino operations within a ten county area surrounding Turning Stone Casino.  As a result, if the deal gets the necessary approvals, Vernon Downs (which is only three miles away from the Indian casino) will be precluded from offering table games though will be allowed to continue to operate their 750 VLTs.

This has caused a dispute between the ownership of Vernon Downs.  Majority shareholder Jeff Gural is pleased with the deal while minority shareholder Gary Greenberg is unhappy with the agreement claiming it "...will be the death knell of Vernon Downs. There will never be full-table games at Vernon Downs thus depriving the horsemen, employees, customers and shareholders a chance to compete on a fair level with Turning Stone or any other full table game casino in the state". 

While I understand Mr. Greenberg may be disappointed with this agreement, one would think he has not been keeping up to date with what is going on in the gaming business and the oversaturation of casino gambling.  Quite honestly, this deal, while negotiated without input from Gural is the best possible agreement one could hope for and instead of it being the death knell of Vernon Downs, guarantees its continued operation.

First of all, Indian gaming sets up its own rules with regards to takeout rates and operation whereas casinos operated by a non-tribal group is subject to state law which regulates takeout rates on casino games.  If Vernon Downs were to open table games and thus be a full-competitor to Turning Point, a pricing war on the takeout level could occur, with Turning Point reducing their take to a level Vernon Downs could not match.  Quite honestly, a head-to-head match up is something Vernon Downs could not win.  Of course, this competition is predicated on the state allowing Vernon Downs to operate a full casino, something which was not assured.  After all, the first three full casinos proposed (Monticello Raceway, Saratoga Raceway, Tioga Downs) did not include Vernon Downs.  Also, any capital expenditure to expand floor space for table games has the potential of putting Vernon Downs once again in to bankruptycffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffff

Secondly, as we are seeing in the Mid-Atlantic region, oversaturation of casinos results in money being divided between casinos, not really the introduction of new gaming dollars.  Therefore, being so close to Turning Point, while Vernon would probably get some new business, it would not be at the levels being forecast by some detractors.

Lastly, the ten county ban on casino gambling with Vernon Downs being allowed to keep its slot machines means the proposed harness track in the Syracuse area will die of.  Let's face it without slot machines, who is going to want to build a racetrack these days?  This means Vernon will by default have a ten county monopoly on horse racing and be the only place outside of Turning Stone with slots.

Bottom line is if this agreement is approved, many others have fallen apart in the past, it is basically  agreement which could have been iod foj

1 comment:

Scott said...

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