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New York City casino remains pipe dream for Las Vegas Sands

Jun 06, 2013 7:05 am

Skift Take

New York is looking to boost tourism with casinos outside of the city, but it won’t pull the names it’s hoping for with upstate properties expected to turn too small a profit

— Samantha Shankman

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Las Vegas Sands Corp., the company controlled by billionaire Sheldon Adelson that is the largest U.S.-based casino operator, said it has no interest in expanding into New York under Governor Andrew Cuomo’s terms.

Cuomo, a 55-year-old Democrat, asked lawmakers yesterday to license three resorts with gambling in the northern part of the state to enhance tourism and economic development.

No casinos would be allowed within New York City. The gambling centers would be permitted in the southern part of the state, including Long Island, five years after the first upstate property opened. Six potential northern locations were identified including the Saratoga-Capital District and the Hudson Valley-Catskills area.

“I don’t think there’s any real understanding of the casino business,” Sands President and Chief Operating Officer Michael Leven said yesterday at the company’s annual meeting in New York when an investor asked about expanding into New York. “It’s 20 years past the time where the Catskills would have been the place to put an integrated resort.”

The upstate markets wouldn’t have enough customers to make casinos very profitable, Leven said.

Adelson, the company’s chairman and chief executive officer, said doing as Cuomo proposes could cost billions of dollars, involving convention center space and shopping. Sands couldn’t meet its goal of a 20 percent return on investment, he said.

Only NYC

“It’s not surprising they would only want to go to New York City,” the largest U.S. market, Rich Azzopardi, a Cuomo spokesman, said by telephone. “However, we would be happy to give Mr. Leven a tour of what upstate New York has to offer. There is a lot to New York state outside New York City.”

Cuomo has been negotiating with lawmakers over casino locations since January, when he announced plans to put them in upstate New York. He’s reached agreements with two casino- operating Indian tribes, the Mohawks near the Canadian border and the Oneidas in central New York.

The deals grant exclusivity zones of 10 counties for the Oneidas and eight for the Mohawks if voters in November approve a constitutional amendment allowing Las Vegas-style casinos in the third-most populous state. That would eliminate those two regions from possible casino development, leaving only four areas for the three casinos Cuomo wants.

Tribal Casinos

One of those four is in western New York, where the state and the Senecas are feuding over $600 million in tax revenue. If a deal is struck, that area may also be eliminated from contention, according to Cuomo’s proposal.

The bill Cuomo released yesterday would be subject to negotiations with lawmakers, with a potential deal by the end of the legislative session on June 20. Not every developer shares Sands’ concerns. Michael Treanor, chief executive officer of Nevele Investors LLC, which owns the former Nevele Hotel in the Catskills, applauded the governor’s plan in a statement. Excluding New York City, as well as the proposed 25 percent tax rate, make the governor’s proposal attractive, Treanor said in a statement.

“We are one step closer to bringing real economic recovery to Ulster County and the Hudson Valley,” he said.

Sands’ executives said they’d be interested in a New York City casino.

“A lot of what happens in terms of casino locations and what happens with governments is that they make political decisions and not necessarily what’s best for the state,” Leven said.

Sands operates a casino 80 miles west of New York City in Bethlehem, Pennsylvania. Pennsylvania passed New Jersey to become the second-largest gambling market in the U.S. after Nevada, with revenue of $3.16 billion last year.

Editors: Pete Young and Ted Bunker.

To contact the reporters on this story: Christopher Palmeri in Los Angeles at cpalmeri1@bloomberg.net; Freeman Klopott in Albany at fklopott@bloomberg.net. To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net; Stephen Merelman at smerelman@bloomberg.net.

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