Concern grows over $20M Nassau OTB payment

Nassau County Executive Laura Curran’s administration and officials of the county’s financial control board are becoming increasingly concerned that Nassau Regional Off Track Betting Corp. may not be able to make the bulk of a nearly $20 million payment the county had expected to apply to this year’s budget.

Nassau County has budgeted $15.75 million in 2018 from revenue from video lottery terminals dedicated to Nassau OTB at Resorts World Casino at Aqueduct Racetrack, which is operated by Genting New York LLC, and so far has received $3 million.

Nassau had hoped to apply three-quarters of the $20 million the county says is due early next year to this year’s budget, and include the remainder in the 2019 budget.

But the revenue depends on installation of the full complement of 1,000 machines authorized under state law, which the casino operator says won’t occur until spring 2019.

NIFA says $12.8 million in VLT revenue is at risk. .

NIFA chairman Adam Barsky said that after OTB paid Nassau $3 million on May 2, “we started asking questions, and this is when we first found out that there aren’t 1,000 machines designated for the county.” Currently, 505 machines dedicated to Nassau are up and running.

For Nassau County to receive the full amount of money it expected this year, Genting will have to “designate 1,000 machines to be Nassau County machines, which has not happened,” Barsky said.

“It’s just another hole in the budget that they’re going to have to fill,” Barsky said.

Andrew Persich, Nassau budget director, said, “We budgeted thinking we’d have 1,000 machines generating $15 million in revenue to the county. Fast-forward now, we’re hearing that there’s only 500 machines installed, which translates into we’re not going to get $15 million. We’re going to get less than that.”

OTB president Joseph Cairo agreed. He said the betting agency won’t have enough in profits this year to “permit a payment of $20 million to the county without 1,000 VLTs being operational” at Resorts World.

Cairo, also the new chairman of the Nassau Republican Committee, said although Genting “had estimated they would make every effort to get it done by ’18, it hasn’t happened.”

“Perhaps the county was somewhat optimistic” in its budgeting, Cairo said. “However, everything was also conditioned upon their placing the 1,000 machines operational on the floor.”

Barsky said the county should have discussions with Genting and OTB to “resolve these open issues.”

He said, “If the understanding is they’re not going to get the money until this later date, then fine, then don’t put it in the [long-term] financial plan as a higher number, because you’ll be creating another hole in next year’s budget. But right now they have a $12 million problem.”

Disclosure of concerns about OTB revenue comes as Nassau faces a budget deficit this year of nearly $105 million in its $3 billion budget, according to projections by NIFA last month. The estimate doesn’t account for possible costs of new county labor contracts or payments that could come due for legal judgments.

Curran, a Democrat who took office Jan. 1, has proposed new parks and traffic fees as a way to help close the budget hole, but faces opposition from some county lawmakers to those and other deficit-reduction plans.

Nassau OTB gets revenue from the dedicated VLTs under a provision in state law enacted after public opposition prevented the agency from building a casino in Nassau.

Suffolk OTB, which has opened Jake’s 58 casino in Islandia, has all of its 1,000 authorized VLTs up and running. Suffolk County is guaranteed a total of $13 million in the casino’s first 10 years of operation, as part of a plan for the betting agency to emerge from bankruptcy. The plan includes $2 million the first year and $3 million the second.

Nassau OTB committed to paying Nassau County $3 million in the 2016 calendar year, $3 million in the state’s 2017 fiscal year — which runs from April 1 through March 31 — and $20 million in each subsequent state fiscal year, according to letters sent from OTB general counsel Arthur Walsh to then-Nassau County Executive Edward Mangano and Barsky.

The letter detailed several exceptions to the payment commitment, including if a similar “full-service” casino opens within a 65-mile radius of Aqueduct, or if gambling revenue for Resorts World drops by 10 percent or more in any one year.

The 2016 letter from Walsh noted that “both parties anticipate that one thousand devices will be designated by April 1, 2018,” and that “the $20 million annual payment would commence on April 1, 2019.”

OTB says it expects to pay Nassau $3 million next spring if the number of VLTs still hasn’t reached 1,000. If all the machines come online sooner, the $20 million payment would be prorated, based on the number of months the 1,000 VLTs have been operating, according to OTB.

Cairo said he would expect to pay Nassau another $20 million in spring 2020.

Because the county’s fiscal year begins in January, and the state’s starts in April, the county has budgeted $15 million for 2018. A quarter of the previous year’s payment, $750,000, also was budgeted for this year.

Curran said in a statement that Genting must install the additional VLTs “as soon as possible and my administration will work with the NYS Gaming Commission, Genting, [Nassau OTB] and my fellow elected officials to ensure that is what happens.”

She said Nassau “cannot be shortchanged in 2019. It is no secret that Nassau County is in dire fiscal straits and every dollar is needed to tackle the mess we inherited.”

Cairo said in an interview on May 15 that “we’ve told Genting as recently as 10 days ago that we’re anxious to have the 1,000 machines as soon as possible, obviously, because it increases revenue to the taxpayers of Nassau County.”

A planned $400 million expansion at Resorts World will accommodate 1,000 Nassau machines as well as a new 400-room hotel, restaurants and other amenities, said Michael Levoff, senior vice president of public affairs. The full 1,000 VLTs dedicated to Nassau OTB will be operating by spring 2019, Levoff said.

By Scott Eidler

scott.eidler@newsday.com@ScottEidler

Scott Eidler covers Nassau County government and politics for Newsday. Scott has worked at Newsday since 2012 and previously covered municipal government and education.