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GAMING AND RACEWAY

January 11,2011

Steve Cohen Office of the Governor 110 State Street Albany, NY 12207

Dean G. Skelos Majority Leader New York State Senate Capitol, Rm. 315 Albany, NY 12247

Robert Megna New York State Division of the Budget State Capitol Albany, NY 12224 Gordon Medenica New York State Division of Lottery 1 Broadway Ctr, #700 Schenectady, NY 12305

Sheldon Silver Speaker New York State Assembly Legislative Office Building, Rm. 932 Albany, NY 12248

Re: Fiscal Impacts of Stockbridge-Munsee Casino Compact

Messrs, Cohen, Megna, Medenica, Silver and Skelos: On December 29, 2010, former Governor David Paterson, in one of his final acts as the leader of the State, entered into a Land Settlement and submitted a Compact to the Federal Department of Interior (DO!) that would give Wisconsin’s Stockbridge-Munsee Community Band of Mohican Indians the ability to develop a Casino with table games and slots in Sullivan County, New York. We believe that this Compact, signed and submitted without public input or oversight and at the very end of the Governor Paterson’s tenure, poses significant, negative budgetary impacts for New York State that should be carefully re-evaluated——particularly in this time of fiscal

342 JEFFERSON STREET • P0 Box 356 • SARATOGA SPRINGS, NEW YORK 12866 PHONE (518) 584-2110 FAX (518) 583-1269

Messrs, Cohen, Megna, Medenica, Silver and Skelos January 11, 2011 Page 2 crises—to determine whether or not the current New York State Administration should withdraw the Compact and inform the DO! that it no longer supports the Compact. Given that DOT is on a statutory-mandated 45-day-clock (ending February 19, 2011) to approve or disapprove the Compact, we additionally request that you ask DO! to “stop the clock” until you have had time to more closelystudy the economic impacts set forth below. The !ndian Casino would result in the near-certain closure of the Monticello Racino, which is located 10 minutes from the proposed site, and take away higher-end and weekend customers from Yonkers, Resorts World New York and Saratoga Racinos. By our calculation, this will lessen the state tax revenues by hundreds of millions of dollars for the Education Fund and Lottery Administration. Coming on top of the closure of NYC OTB, the opening of the Sullivan County Casino may well spell the end of the New York horse racing industry. We estimate annual losses tied to the proposed casino to include (all numbers are rounded): • • • • • • $407 million in overall revenue; $188 million in state education funding; $127 million in racetrack commissions; $51 million horse racing industry support; $40 million in lottery administration fees; 900 employees and thousands more from education and horse racing industry.

The reasons for these losses are simple: the proposed !ndian Casino would provide both table games and slot machines, which are more attractive than state sponsored video lottery terminals. In addition, Indian casinos pay taxes of anywhere of 18% to 25% on slots and 0% on table games compared with Racinos that pay taxes of anywhere from 60% to 70% on video lottery revenues. The reduced tax structure provided to Indian Casinos not only immediately reduces state tax and education funding, but creates a structural competitive advantage that cannot be overcome because Indian Casinos have the ability to offer free room, food and beverage because of the low tax rate. With limited products and profoundly greater taxes, Racinos cannot and will not be able to effectively compete. Existing VLT Operators have already become cautious when considering new or further investment into their facilities. Proposed new construction has been minimized and expansion plans have been delayed as uncertainty remains. In addition to the 900 existing jobs, numerous new jobs will not be ëreated because overall investment must be curtailed.

Messrs, Cohen, Megna, Medenica, Silver and Skelos January 11, 2011 Page 3 The last fact we would like to highlight is that current and past relationships with Indian Tribes that operate casinos within New York State have not provided the necessary and expected revenue to the State. As you know, the Seneca Nation and St. Regis Mohawk Tribe have discontinued “exclusivity” payments. It is not currently clear whether the State will ever receive the disputed payments. In the event that the tribes are successful in proving the State breached exclusivity provisions, New York would have five casinos that provide no economic benefit to the State. This should be compared to the VLT industry that continues to provide hundreds of millions annually to education, horse racing and lottery, funding that is paid without controversy or legal challenges. It is our opinion that going forward with this Compact without seriously considering the loss of hundreds of millions of tax revenues and subsequent thousands of jobs would be extremely irresponsible and damaging to New York State. We therefore request that you 1) launch a comprehensive economic analysis to confirm whether or not the State can sustain the significant negative financial and employment impacts and 2) request that the Department of Interior “stop the clock” on its decision-making process until you have completed your review. Sincerely,

James D. Featherstonhaugh Secretary JDF/cr I am executing this letter on behalf of and with the specific approval of the following Racinos: Fingerlakes Racing Association, Inc. Buffalo Trotting Association Saratoga Gaming & Raceway Empire Resorts, Inc. I Monticello Casino and Raceway Empire City / Yonkers Raceway Resorts World New York