Casino, Vernon Downs: The gambling connection
Oct. 27, 2002

By R. PATRICK CORBETT
Observer-Dispatch

The plan is grand.

A 20-story hotel and a separate 100-suite hotel. New championship golf courses and a spa. A convention center capable of hosting thousands.

The other plan is grand, too.

A multi-story hotel. A huge center for slot-machine-like gambling. A Saratoga Performing Arts Center-type amphitheater and food court-style dining.

The Oneida Indian Nation, author of the first plan, and Vernon Downs, author of the second, are thinking grandly these days. The Nation says it could create 1,000 jobs, and Vernon Downs expects to create hundreds.

But can the Mohawk Valley support an expanded Turning Stone Casino Resort in Verona and a brand-new gambling facility at the harness track in Vernon?

Without a question, according to gambling industry market analysts.

But can the owners of the long-suffering harness track afford to jump on the gaming train?

Not without help, "the same market-watchers say.

For years, New York's struggling harness tracks cast covetous glances at states where lucrative slot machines are permitted next to the pari-mutuel betting windows.

When the state Legislature finally passed a law last year approving video lottery terminals -- similar to slots -- at tracks, investors perked up.

Las Vegas businessman Shawn Scott anted up $8.5 million to pay off Vernon Downs' debts, and promised another multi-million-dollar injection to ready the track for the VLT boom.

Vernon Downs officials also hope to benefit from the drawing power of the Oneida Indian Nation's nearby casino. Turning Stone Casino Resort already is a gamblers' destination, attracting around four million visitors a year.

And it's growing.

It added 15,000 square feet to its gambling floor earlier this month, shortly after Vernon Downs unveiled plans for its own 33,000-square-foot "casino building," and future growth that might include hotel, amphitheater and food outlets.

Turning Stone's two new championship golf courses and a new 100-suite luxury hotel and spa are scheduled to open in 2004, Oneida Indian Nation spokesman Mark Emery said.

Vernon Downs Marketing Director Mark Scalzo said the Turning Stone expansion was factored into a market study for the track's gaming and entertainment plans.

"Innovation Group did a study for us, what the market would take," he said. Based on the findings, he said, "We initially were looking at 1,200 (VLTs) and up to 3,000 in a couple of years."

Dynamic duo

The market is a 300-mile target with Vernon Downs and Turning Stone at the bull's-eye, Scalzo said.

Emery would not comment on specific marketing initiatives.

"The Oneida Indian Nation wishes Vernon Downs the best on their new enterprise," he said.

Vernon Downs President Andrew Goodell isn't waiting for any formal marketing arrangement.

"I took out an ad last week in the New York Golf Digest," he said Thursday. The ad invites people to "play great golf, play the slots, enjoy horse racing and stay at a great hotel," he said.

Golf? Vernon Downs doesn't have golf.

Said Goodell: "I have money to promote the Indians' golf courses, and why not? We're doing it, and I hope they will."

Chris Destito, Oneida County Convention and Visitors Bureau president, said Vernon Downs isn't alone.

"There are many companies that use the casino as part of their promotion, in many cases very successfully," he said.

In any event, the two gaming venues will try to carve out shares of the same market.

"Are the Indians and tracks going to compete? Of course," Innovation Group gaming planner Paul Girvan said.

"But working together, the market will grow," he said. "Our surveys of gamers show they like to have more than one casino in close proximity."

He said two casinos in Oneida County could win a respectable share of the massive gaming market, capable of drawing gamblers and tourists from much of Upstate New York and the eastern portion of Ontario, Canada. But they would hardly concern Atlantic City or eastern Connecticut, home of Indian-owned Foxwoods and Mohegan Sun casinos.

Target dates

When the competition will start also is up in the air.

Goodell said he met with lottery officials Oct. 18, and, "they were optimistic it would be about six months for them to be up and operating."

He also met with the four manufacturers the lottery division has selected to make the VLTs.

"They can meet that deadline, too," he said.

Goodell said his target for a casino building is next spring but the exact timing depends on financial and legal factors beyond the track's control.

Right out of the gate, the tracks were unhappy with the 25 percent share of VLT revenues the state law carved out for them. The state would keep 60 percent for education and give 15 percent to the Lottery.

Of the remaining 25 percent VLT take, horsemen would get a hefty chunk the first year.

Said Girvan: "What the state has left for operations is not sufficient (to pay back investors)." He said other states give the tracks up to 60 percent of the VLT money.

Rick Papa, president of the Harness Horsemen's Association, representing horse owners at the track, said, "The VLT law was passed for us."

He offered little hope of the horsemen giving up any of their legislated share of VLT profits.

Goodell hopes to convince them otherwise.

"Every proposal the track has made would ensure the horsemen would do better than they ever have at the track," he said.

Vernon Downs also has applied for a $1.1 million state economic opportunity fund grant to help with its $4.5 million construction project.

"The state would recoup that in the first two weeks we were opened," Goodell said.

"Frankly, it could make the difference between doubling employment or not," he said. Vernon Downs expects to add 150-200 employees with the advent of VLTs, he said, nearly doubling the payroll.

As for the shape of the VLT casino, he said, "We have a draft of the design and we're working with contractors on cost."

Goodell said for everything to come together, "we need the state grant, we need the architect's numbers and we need the horsemen's contract to come into place."

"We're close," he said, but the bottom line is, "We need to make sure the track has funds to cover the cost (for construction, security and operation of the VLTs)."

Otherwise, there would be no VLT money for anyone to share.

There are a few legal bumps in the road to VLT profits.

State Supreme Court Judge Joseph Teresi is reviewing a constitutional challenge to the state VLT law, and state lawyers have asked him to dismiss the suit.

Goodell said he would proceed on the assumption that the state legislation is valid.