Vernon Downs Lifelines Sent to New York Governor, Bills Would Reduce Racino Taxes

Posted on: June 14, 2023, 03:43h. 

Last updated on: June 14, 2023, 12:13h.

Devin O'Connor @CasinoorgDevinO Read More
Expertise: Asia Pacific Gaming, Commercial Gaming, Legislation, Politics.

Vernon Downs Casino Hotel has been afforded the lifelines its owner, Jeff Gural, has sought from the New York State Assembly. The tax relief measures now await New York Gov. Hochul’s (D) signature.

Vernon Downs Casino Upstate New York racino
Vernon Downs Casino Hotel in Upstate New York was on the brink of closing and terminating 250 employees. New York lawmakers came to the property’s rescue with a tax savings measure that the property’s owner says will allow it to better vie with its upstate competitors. (Image: Vernon Downs Casino Hotel)

Gural last month said he would be forced to close the historic harness racetrack unless state lawmakers in Albany provided the property with substantial tax savings. Those savings are expected to come through Assembly Bill 6144-A, which is designed to correct an oversight on Vernon Downs’ gaming tax rate incurred back in 2020.

It was nearly three years ago under the Gov. Andrew Cuomo (D) administration that upstate casinos and racinos were afforded a tax break on their slot and video gaming income. Cuomo allowed the racinos, which only operate video lottery terminals (VLTs) on the New York Lottery’s behalf, to seek a 7% tax reduction on their gross VLT income for five years.

All but Vernon Downs was afforded such a tax reduction. Cuomo’s office didn’t provide a reason publicly for Vernon Downs’ petition being denied, but Gural later called the then-governor “a bully.” AB 6144-A remedies the situation and brings the upstate racinos into uniformity regarding their VGT tax rates.

Along with Vernon Downs, Gural’s New York real estate empire includes the Tioga Downs Casino Resort, one of four full-scale Las Vegas-style commercial casino resorts in upstate New York. Gural additionally controls the Meadowlands Racetrack and its FanDuel Sportsbook in East Rutherford, NJ. The FanDuel Sportsbook is the top-grossing sportsbook in New Jersey.

Jobs Saved

Gural said he lost about $2 million last year keeping Vernon Downs open. The racino’s higher tax rate limited its ability to compete with the other New York casinos and racinos in terms of free play promotions and other incentives.

Last month, Vernon Downs filed a Worker Adjustment and Retraining Notification (WARN) with the New York Department of Labor. WARN filings are required at least 60 days in advance of when a large employer expects to make considerable changes to its workforce.

Gural said all 250 jobs at Vernon Downs were at stake, as without a tax break, the racino would close permanently. But with Hochul expected to sign AB 6144-A, those jobs are expected to be preserved.

I am pleased to have been a co-sponsor of Assembly Bill 6144-A, which will correct an oversight and create uniformity within the casino industry in New York State,” said Assemblyman Brian Miller (R-New Hartford). “Vernon Downs has been a staple in the community, and this will provide the employees and their families some sense of stability.”

Gural had earlier said that Vernon Downs “provided jobs for 250 community members, $13 million in tax revenue for New York State, but lost $2 million. COVID decimated our business and without modest tax relief, we can no longer operate.”

A separate measure designed to assist Vernon Downs, Senate Bill 4817, was also sent to Hochul’s desk by the Assembly. That bill restores the racino’s 6.4% agent commission from the lottery, which was suspended in 2020 after Vernon Downs failed to maintain at least 90% of its 2016 workforce.

State to Monitor Racino

In exchange for the tax cut and resumption of the agent commission, assuming Hochul signs the measures into law, Vernon Downs will need to demonstrate to New York lawmakers how the savings are protecting jobs and providing capital for the racino to turn around its economic woes.

“[Vernon Downs] shall provide an initial report to the governor, the speaker of the assembly, the temporary president of the Senate, and the [New York Gaming] commission detailing the projected use of funds resulting from such tax adjustment,” AB 6144-A reads.