Concord racino deal has big payoff

Concord racino deal has big payoff
Developer would get hundreds of millions back from state on $1B investment in former Catskills resort
By JAMES M. ODATO, Capitol bureau
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First published: Friday, June 20, 2008
ALBANY -- A Catskills developer planning to move the Monticello Raceway and build a bigger racino as part of a $1 billion investment in the former Concord resort would get hundreds of millions of dollars returned to him in a deal with the state.

A bill for a grand gaming and lodging facility, sponsored by majority members of the Senate and Assembly, is being readied for passage on Monday, the final scheduled day of this year's session. It is unclear whether Gov. David Paterson will go along with it.

The bill would give Louis Cappelli, known for his Westchester County office building and hotel projects with partner Donald Trump, a unique formula of revenues from video lottery terminal operations. Seven operators of other racinos would be getting VLT fees from the Division of Lottery under current statutes, but Cappelli's cuts would differ.

Under the 40-year deal of the new legislation, Cappelli would keep 75 percent of VLT revenues to help pay off his investment. He said his facility would outperform the current racino substantially and the horse racing would improve as well. Payments to the horse owners would come from Cappelli's share of the VLT revenues, Bonacic said.

The current racino provided $31.5 million to public education last year, but it gets to keep only about 42 percent of VLT revenues after expenses.

His money would come only after he invested $1 billion on the new project, which includes renovating and reopening the Concord hotel, golf courses, retail and relocating the Monticello Raceway and racino a few miles to his resort site.

Cappelli would not get funds unless the project employed at least 2,000 people full-time. He would also be expected to pay 50 percent more in school taxes, and and his properties would be responsible for at least $50 million in local taxes, said Sen. John Bonacic, R-Mount Hope, the Senate sponsor.

"A lot of good things are happening in Sullivan County, but we need a signature resort," Bonacic he said.

Assemblywoman Aileen Gunther, D-Forestburgh, said the project is important for the entire region, and will benefit school children.

Cappelli, a major stakeholder of Empire Resorts, which owns the current raceway and racino, wants to move the facility and increase the number of machines to 2,500 from 1,600.

Cappelli has maintained that his facility would draw visitors from New York City, a roughly 90-minute drive away, and keep gamblers from taking their money to out of state venues. Cappelli envisions a facility on the scale of the popular Mohegan Sun, with a "world class" convention center and hotel.

But Jeff Gural, operator of track racinos at Vernon Downs and Tioga Downs, said Cappelli's project will fail unless it includes table games, not just video slots.

"Why would people drive 90 miles to the Concord, when they can drive 90 miles to Atlantic City or Connecticut?" said Gural. "The typical VLT customer is not interested in golf courses and a fancy hotel, but your typical casino customer is interested in those kinds of things."

Gural predicted Cappelli will be back in Albany in a few years asking for a constitutional amendment to allow casino games.

The state has been interested in spurring economic development in the Catskills and it needs revenues to help close a $21.5 billion projected budget gap over the next three years.

James M. Odato can be reached at 454-5083 or by e-mail at [email protected].

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