Del Lago casino, struggling with revenue, seeks state bailout

ALBANY - The del Lago casino in the Finger Lakes is seeking a better tax deal from the state to address its struggling revenue — slightly over a year since it opened.

Tom Wilmot, the principal owner of the casino, told USA TODAY Network’s Albany Bureau on Tuesday outside the Capitol that he hoped state leaders would assist the casino.

He didn't say specifically what the request was, but it appears the casino is seeking a lower tax rate paid to the state.

"I think we need some help at this point, and what the future holds, time will tell," Wilmot said.

Later Tuesday, a spokesman for the casino said the push in Albany is the result of a "blatantly unfair competitive disadvantage."

He contended that the Seneca Nation of Indians in western New York is withholding taxes from the state in a gaming dispute and using the money to offer incentives to lure gamblers from the region.

“The Seneca Nation stopped making payments to both New York state and to the local governments last year," casino spokesman Steven Greenberg said.

"What are they doing with that newfound windfall? Using more than $50 million to provide additional promotions and incentives — particularly in the Rochester area —to lure customers from del Lago. And it’s working."

The Senecas disputed del Lago's claims, saying, "The owners of del Lago had unrealistic expectations when they applied for their gaming license."

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Rough start

The $440 million casino in Tyre, Seneca County, opened in February 2017 with high hopes that it would be an economic boon for the region and build on the tourism industry in the Finger Lakes.

But the casino, one of four upstate casinos to open over the past year, entered a highly competitive upstate gambling market and ended its first year well behind projections.

Del Lago ended its first year at about $147 million in revenue — about 44 percent lower than projections, the largest discrepancy among the three upstate casinos that opened a year ago, the Albany Bureau reported last month.

While all three of the new casinos underperformed, Moody's Investors Service issued a scathing report specifically on del Lago's performance.

It warned "without a substantial improvement in revenue, del Lago will not be able to achieve a level of performance that can support its existing debt capital structure."

Wilmot said the situation isn't dire. "We’re paying the bills."

But he added, "Long term, it isn’t going to be sustainable without some help."

Who is to blame?

The Oneidas have three casinos in central New York and pay 27 percent of the slot revenue to the state, but none of the table games revenue, in a deal in 2013 to end some land claims.

Del Lago pays 37 percent to the state on its slots and 10 percent on its table games.

“All del Lago is looking for is a fair, competitive marketplace," Greenberg said.

But he again focused on the Senecas not paying the state.

The tribe was paying the state about $110 million a year as part of a 2002 gaming compact, but ended the payments last year, saying the agreement had expired. The state is fighting the Senecas' claims.

"Unfortunately, the Senecas have upset that applecart and now del Lago is seeking to level the playing field," Greenberg continued.

“Our first year has proven how valuable del Lago is to the Finger Lakes region. We want to continue to expand and bring even more tourism and economic development to Seneca County and the surrounding counties.”

Seneca spokesman Philip Pantano charged that del Lago thought it could "take significant market share" from the Oneidas and the Senecas — as well as bring in new revenue.

"Which of those promises did they fail to live up to? The numbers don't lie," Pantano said.

"The projections haven't materialized, falling short by some 44 percent, and now, del Lago is turning to the state to fund their failure to meet their own goals.

"That’s their fault, not ours."

If the Senecas are pumping more money into incentives to bring in new customers, it could not legally come from the tax money being withheld from the state, the state Budget Division confirmed.

The money in dispute needs to be held in escrow until the issue is resolved, the state said.

"Just like in 2013, we have no reason to doubt that the Senecas are not honoring that requirement," said Morris Peters, a spokesman for the Budget Division.

Will the state assist?

Whether the state Legislature and Gov. Andrew Cuomo will come to the casino's aid is uncertain.

And they aren't the only one: Rivers Casino in Schenectady is seeking a better tax package from the state, according to Assemblyman Phil Steck, whose district includes that facility.

The other two upstate casinos, Tioga Downs in the Southern Tier and Resorts World Catskills, said they are not seeking any new tax breaks.

"No, we’re focused on trying to improve our revenues right now, and we built a destination resort that deals with locals and hopefully out-of-town guests," said Jeff Gural, who owns Tioga Downs.

"My focus right now is making sure we are doing everything right in the way of marketing."

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Some lawmakers are opposed to helping a facility that won a state bid for a casino license in 2014 and vowed it could succeed — despite concerns from the outset that it faced stiff competition.

Del Lago has already received local tax breaks.

"I think it was a bad business decision to move there in the first place, but they knew what they were doing when they got into. They made their bed, basically," said Assembly Racing Committee Chairman Gary Pretlow, D-Mount Vernon, Westchester County.

But Senate Majority Leader John Flanagan, R-Suffolk County, told reporters Tuesday that providing assistance to the casinos is part of budget negotiations for the fiscal year that starts Sunday.

"That is being discussed as well, and I think everyone is trying to make a solid effort," Flanagan said.

Competition builds

To the west, there are three casinos owned by the Senecas in the Buffalo and Niagara Falls areas; and two racetracks with video-lottery terminals: Batavia Downs and Finger Lakes.

To the east, there are now three casinos owned by the Oneida Nation, including the massive Turning Stone resort.

But the state has helped out the racinos in the past amid concerns those facilities might close without state help and jeopardize the jobs there.

Del Lago, off Exit 41 on the state Thruway, employs more than 1,200 people and provides tax revenue to the state and localities.

In recent years, the state has provided better tax deals for Finger Lakes Racetrack and Vernon Downs near Turning Stone because of the casino competition upstate.

Batavia Downs is also seeking a better tax deal.

Wilmot was at the Capitol as the state Legislature and Cuomo were negotiating a budget deal.

He said it was uncertain whether anything could be achieved as part of the budget or as separate legislation.

"We’re very flexible; just need some kind of relief," Wilmot said.

He added, "We’re just not hitting the numbers."

JSpector@Gannett.com

Joseph Spector is chief of USA TODAY Network's Albany Bureau.