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Aqueduct casino's early grade a Big A
By Matt Hegarty
The casino at Aqueduct that opened Oct. 28 has so far posted revenue numbers far above its initial projections, with per-machine figures nearly double that of any casino on the Eastern seaboard, according to figures from state gambling agencies.
The figures augur well for the casino operator, Genting New York, and the New York racing industry, which will receive approximately 12 cents out of every dollar in gross revenue from the casino’s eventual 4,500 gambling machines. So far, with just over half the casino’s machines installed, the casino is generating enough revenue to provide at least $62 million in total annual subsidies to Aqueduct’s operator, the New York Racing Association, and to the horsemen who run at its three tracks. That figure could go far higher when the casino puts another 2,000 machines into operation Dec. 15.
So far, each machine at the casino is generating approximately $600 in revenue a day, a large figure in an industry where $300 a day in daily revenue is considered excellent. Although the $600 figure is not out of line for a $1 billion facility that is the sole casino in the most densely populated urban center in the United States, Genting and NYRA had both used a figure of $500 for their most optimistic expectations and had budgeted for less than $400 per machine.
“It’s been a wild ride,” said Charles Hayward, the chief executive of NYRA.
For comparison, the 5,400 machines at Yonkers Raceway just north of the city each generate approximately $330 in revenue a day. At Parx Racing in Philadelphia, the average win per machine is approximately $290. At nearby Delaware Park, 2,400 machines generate $230 a day each, and at Monticello Raceway in the Catskills resorts region, average win for each of 1,100 machines is $165.
The gaudy figures for the Aqueduct casino are not expected to last, however. Already, the figures have been trending downward after only three weeks, settling at $576 per machine in the third week of operation, and the addition of 2,000 machines in mid-December will almost certainly drive the figure to a far lower level.
As a result, NYRA is sticking to a per-machine figure of $380 in its budget for 2012, according to Hayward, a figure that would net the association and its horsemen $75 million in annual subsidies from the facility. Even with the addition of 2,000 machines, that figure appears to be too low, but Hayward said that the association is more comfortable with a conservative figure.
“We’re being conservative because we don’t know where they’re going to go,” Hayward said. “And it’s always easier to adjust up rather than down.”
Stefan Friedman, a spokesman for Genting, would not provide a specific estimate for where the per-machine figure will settle after the Dec. 15 opening of the second phase of the casino, but he said the company still anticipates providing $500 million a year in revenue for the state. Since New York retains approximately half of the revenue from casinos in the state, Genting is estimating that the casino will generate $1 billion in net revenue, which would nearly double the initial estimates for the annual amount of subsidies that will go to racing.
The opening has not been without some problems. For one, traffic into and out of the property has been clogged at the two entrances and exits, and access to the nearest subway stop – a 300-yard walk from the entrance – lacks a covered walkway. While Genting negotiates with the city on an improved subway station and continues on a project to add a roof to the walkway, patrons are being shuttled from the stop to the facility’s entrance. (A subway stop that existed just outside Aqueduct’s entrance was closed by the city’s transportation agency five years ago.)
Rick Violette, the president of the New York Thoroughbred Horsemen’s Association, said the transportation problems linked to the facility would probably ease in the next several months. And, because of the problems and a relatively “soft” opening from a marketing standpoint, Violette said the revenue figures could probably have been higher.
“You would hope the revenue figures hold up,” Violette said. “You’d expect they would, because there’s a learning curve here. And they really haven’t done a whole lot of advertising, and the platform for the subway stop hasn’t been finished. I would think that’s kept some people away.”
Violette said he also thought the casino was having a crossover impact on racing, though studies generally conclude that slot-machine players are not racing fans, and vice versa. But Violette cited some encouraging statistics for the first three weekends the casino was open, including sizeable gains in ontrack handle and attendance. Those gains, however, are probably linked to the closing of New York City Off-Track Betting in December of last year, which has deprived horseplayers in the five boroughs from any brick-and-mortar betting outlet.
Hayward said he agreed somewhat with Violette’s analysis, saying the casino has given the grandstand a bright new facelift for a facility that was last renovated more than 50 years ago. In addition, the casino’s restaurants and bars have provided horseplayers with new food and beverage options, along with new places to watch the races, including an outdoor patio overlooking the track.
“The casino has probably made it more interesting to come out to watch the races,” Hayward said.
Anticipating the subsidies, NYRA has already raised the purses at its Aqueduct meet by 36 percent, or by $8.6 million, and similar bumps are expected at Belmont and Saratoga in 2012. That will make the year-round circuit the richest in the country by far, a shot in the arm for a sport that has been suffering mightily the last three years after half a decade of stagnation.
For NYRA, the subsidies for the casino will probably allow the association finally to get its books in order, three years after emerging from a bankruptcy filing that was linked in part to chronic delays by the state in approving an operator for the casino, which was authorized in 2001. Half of NYRA’s share of the casino subsidies will go toward operating funds, shoring up the association’s bottom line, and the other half will be dedicated to capital improvements at the three tracks.
The association doesn’t plan to spend its first allotment of the casino money on anything fancy. Instead, for the first year, the windfall will go toward projects at the three tracks that have been put off as the association scraped by over the last decade, according to Hayward. But by 2013, NYRA expects to begin projects at Saratoga that will add dormitories for backstretch workers and improve the grandstand.
“Things that have been deferred at the three tracks are going to get the money first,” Hayward said. “Remember, this has been 10 years in coming.”
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