On Wednesday, December 17, the New York Gaming Facility Location Board announced the three destination gaming resorts which will be considered for commercial casino licenses by the New York State Gaming Commission.

A release from the New York Gaming Facility Location Board states that the destination resorts that will be considered are the Montreign Resort Casino in the Catskills/Hudson Valley Region (‘Montreign’), Rivers Casino and Resort at Mohawk Harbor in the Capital Region (‘Rivers’) and Lago Resort and Casino in the Eastern Southern Tier/Finger Lakes Region (‘Lago’).

To view the executive summaries for each of the 17 applications that were submitted in the process, click here.

Tioga Downs had applied to operate a casino at its location in the Eastern Southern Tier (Region 5), but the New York Gaming Facility Location Board selected Lago Resort & Casino.

Empire Resorts, Inc.’s Montreign Resort Casino was selected in the Catskills/Hudson Valley Region. In November, Empire Resorts, Inc. issued a press release which stated that its wholly-owned subsidiary, Monticello Raceway Management Inc., and the Monticello Harness Horsemen’s Association had entered into an agreement that governs the conduct of MRMI and MHHA relating to horse-racing purse payments, the simulcasting of horse races and certain other payments.

Empire’s November release stated that the MHHA agreement was for an initial term of two years. It also stated that if Montreign was granted a Gaming Facility License, the MHHA agreement would be extended for an additional seven years beginning on the date that the New York State Gaming Commission approved Montreign to engage in legalized gaming. The release went on to state that, on the same date, the MHHA would also receive 1,000,000 shares of Empire common stock and a warrant to purchase 300,000 shares of common stock, the proceeds of any sales of which will provide additional monies for the harness horsemen’s purse account.

The contents of the New York Gaming Facility Location Board’s release on its gaming destination decision appear below.

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NEW YORK GAMING FACILITY LOCATION BOARD SELECTS DESTINATION GAMING RESORTS IN THE CATSKILLS, CAPITAL AND FINGER LAKES REGIONS TO PROMOTE ECONOMIC DEVELOPMENT IN UPSTATE NEW YORK

Board selects casinos in Sullivan, Schenectady and Seneca Counties for consideration for licensure by the NYS Gaming Commission

The New York Gaming Facility Location Board today selected three destination gaming resorts to be considered for commercial casino licenses by the New York State Gaming Commission (“Commission”): Montreign Resort Casino in the Catskills/Hudson Valley Region (“Montreign”), Rivers Casino and Resort at Mohawk Harbor in the Capital Region (“Rivers“) and Lago Resort and Casino in the Eastern Southern Tier/Finger Lakes Region (“Lago”).

Based on the materials submitted, Montreign, Rivers and Lago collectively will create more than 3,600 total direct jobs through combined capital investments of more than $1.3 billion. Once operational and based on blended tax rates, the facilities anticipate generating $212.4 million annually for education statewide on top of existing state aid. In addition, each eligible region and host county/municipality will receive between $8 million and $10.3 million annually.

The Board, which was tasked with selecting up to four proposals across the three eligible regions, approved recommending the three projects to the Commission at its final meeting in Albany.

“We believe these destination gaming resort proposals are of the right scope, right size, right financing and in the right locales which should help New York State bring thousands of jobs and millions of dollars in economic development to long-distressed regions of the state,” said Board Chairman Kevin S. Law. “We were impressed by the strong interest in investing in Upstate New York and appreciate the effort, care, time and skill that each Applicant put forth throughout this process.”

The Board determined that out of 16 applicants, Montreign, Rivers and Lago evidenced strong local support, will provide strong environments for workforces and are of the desired scope and quality to fulfill the intent of the Upstate New York Gaming and Economic Development Act of 2013 (the Act) by bringing jobs and economic development to long-distressed regions of the state.

The Act mandates that all of the State’s tax revenue from these facilities be distributed across New York:

• 80 percent of the State’s tax revenue will be applied statewide for school aid and/or real property tax relief. Any amounts allocated to school aid will be in addition to school aid currently provided by New York’s educational aid formula and be in addition to existing Lottery aid to education.

• 10 percent of the State’s tax revenue will go to the counties surrounding the facilities in the three regions for education assistance and/or real property tax relief

• 10 percent of the State’s tax revenue will be split between the host municipality and host county

Based on the Applicants’ annual gross gaming revenue estimates for year 2019 with the blended applicable tax rates:

• Montreign is expected to generate $82.7 million for statewide school aid and/or property tax relief, $10.3 million for local governments in the Catskills/Hudson Valley Region, plus an additional $10.3 million to be split between Sullivan County and the Town of Thompson.

• Rivers is expected to generate $65.7 million for statewide school aid and/or property tax relief, $8.2 million for local governments in the Capital Region, plus an additional $8.2 million to be split between Schenectady County and the City of Schenectady.

• Lago is expected to generate $64 million for statewide school aid and/or property tax relief, $8 million for local governments in the Eastern Southern Tier/Finger Lakes Region, plus an additional $8 million to be split between Seneca County and the Town of Tyre.

The Board determined that the selection of three Applicants—one in each region—would maximize prospects for sustained success and be in the best overall interest of the State. The Board declined to select a fourth Applicant in the belief that a second competing new gaming facility in any of the regions would make it significantly more difficult for any gaming facility to succeed in that region.

Montreign and Rivers will be integrated into larger economic development projects, which the Board believes will help to ensure the long-term success of the two facilities and further advance the objectives of the Act to drive job creation and economic development in Upstate New York. The Board stated its expectation that the Commission take appropriate steps to ensure the selected Applicants substantially fulfill the development commitments and execute the plans that each advanced in its application.

All three Applicants received strong local support for their projects. In addition to the approval of the governing board of each municipality in which the Applicants’ projects are located (a requirement of the Act), Montreign, Rivers and Lago produced letters of support from nearby municipalities, the Chambers of Commerce in their own and neighboring counties and other individuals and businesses. Additionally, all three were subject of numerous supportive public comments heard by the Board. The Board recommended that the Commission work with Lago to address potential traffic impacts of its facility on the local community.

The Board also recognized the importance of minority and women-owned business enterprises (MWBE) and recommended that the Commission implement conditions to licensure requiring the three successful Applicants match or exceed Governor Andrew M. Cuomo’s Executive Order establishing a 30 percent goal for MWBE contracting.

Over the past nine months, the Board created and issued a Request for Applications to operate a commercial casino in New York State (“RFA”), resulting in the receipt of 16 complete Applications totaling more than 150,000 pages of material that were thoroughly reviewed, evaluated and analyzed. In addition, the Board members traveled the State and conducted three days of public comment events, reviewed more than 12,000 public comments and visited proposed locations. The Board also worked closely with expert consultants and applicable State agencies to thoroughly evaluate and discern the components of each Application, with particular attention paid to the financial viability, stability and investment structure of each owner and operator.

In evaluating the RFA submissions, the Board followed the statutory criteria established by the Act, which requires the evaluation of economic activity and business development factors (70 percent weight), local impact and siting factors (20 percent weight) and workforce enhancement factors (10 percent weight).

In addition, the Board developed an additional criterion as permitted to consider which proposals best fulfill the intent of the Act in regard to providing economic assistance to disadvantaged areas of the State while enhancing Upstate New York’s tourism industry.

The Board considered the challenges facing the gaming industry in other jurisdictions. Therefore, the Board sought to maximize the chances for sustainable success of facilities in the three regions. Accordingly, the Board weighed heavily the ability of the successful Applicants to succeed based upon the strength of their capital structure and experience in operating similar gaming facilities.

The Board also considered the level of competition from other possible gaming facilities, particularly in the Catskills/Hudson Valley Region. The Board, through expert market analysis, determined a facility in the Catskills would be negatively impacted if there was a competing facility in Orange County. The Board has determined that a second competing new gaming facility in any of the regions (including the Catskills) would make it significantly more difficult for any new gaming facility to succeed in that region.

In its review of material, the Board received expert analyses regarding the revenue-generating capabilities of the Applicants as well as proposed financing and capital structures, credit support, impacts and mitigation plans. The Board examined revenue projections, potential cannibalization of existing gaming facilities, potential impact of competing new casinos within a single region and qualitative factors that might affect the attractiveness of the new gaming facility, including development and operating experience and project design. In particular, the Board studied projections under various assumptions of gross gaming revenue and impacts to State revenue after accounting for potential cannibalization of revenue from existing video lottery gaming and Native American facilities and the potential impact of competing new casinos within a single region.

The Board issued along with its decision a written document explaining its selections, available at www.gaming.ny.gov/pdf/12.17.14.GFLBSelection. The Board stated its intention to issue a full report of findings on each of the 16 Applicants, in accordance with the Act, within 30 days.

The Gaming Commission must now commence more comprehensive background and license suitability reviews of the three Applicants with the assistance of the New York State Police. Once successfully complete, the Commission will issue commercial casino licenses to the Applicants. More information about the commercial casino siting process may be found at www.gaming.ny.gov/gaming/casinos.php.

Information about the three selected Applicants and the Board’s evaluation of each can be found in the Board’s written Selection document. In brief, the three selected Applicants are:

Montreign Resort Casino, Thompson, Catskills/Hudson Valley Region:

Empire Resorts, Inc. proposed to develop the Montreign Resort Casino within a planned destination resort known as Adelaar in the Town of Thompson in Sullivan County. This gaming facility features an 18-story casino, hotel and entertainment complex featuring an 86,300 square-foot casino with 61 gaming tables, 2,150 slot machines, 391 hotel rooms and multiple dining and entertainment options, with several meeting spaces. The Adelaar development would also feature an indoor waterpark, hotel, an “entertainment village” with dining and retail outlets, a golf course and significant residential development.

The proposed location in Sullivan County could maximize potential to revive a once-thriving resort destination area that has experienced a significant downturn and has a great need for economic development and well-paying jobs. Montreign’s inclusion in the Adelaar development increases prospects for an attractive tourism destination.

Montreign has evidenced widespread local support and intends to partner with local businesses and promote regional tourism, including impacted live entertainment venues in the area. Montreign demonstrates very strong labor-management cooperation and has organized labor’s support of the project through signed and executed agreements.

Rivers Casino & Resort at Mohawk Harbor, Schenectady, Capital Region:

Capital Region Gaming, LLC, on behalf of Neil Bluhm and The Galesi Group, proposed to develop the Rivers Casino & Resort at Mohawk Harbor on the Mohawk River in the City of Schenectady in Schenectady County. The facility would reside on a 60-acre waterfront location with a 50,000-square-foot casino featuring 1,150 slot machines and 66 gaming tables. The facility would host a high-end steakhouse and other casual and light fare restaurants, an entertainment lounge, a banquet facility and a spa. A proposed “Four Points by Sheraton-” or “Aloft-” branded hotel would feature 150 rooms and be in addition to a planned 124-room hotel being developed on the northern portion of the Mohawk Harbor project.

Rivers will support the revitalization of Schenectady by replacing one of the country’s oldest brownfield sites with proposed total capital investment is $300.1 million with opportunities for enhanced economic impact in the region due to the project residing within a $150 million mixed-use waterfront development being completed by The Galesi Group. In total, the Mohawk Harbor project will combine residential, commercial and retail uses as well as a new harbor, riverfront trails and open spaces.

The project has generated substantial local support.

Lago Resort & Casino, Tyre, Eastern Southern Tier/Finger Lakes Region:

Lago, a partnership of Wilmot Gaming, LLC and PGP Investors, LLC, proposes to develop the Lago Resort & Casino in the Town of Tyre in Seneca County. Lago’s facility would include a 94,000 square foot casino with 2,000 slot machines and 85 gaming tables, 207 hotel rooms, multiple restaurants and lounges featuring local fare and a spa.

Lago’s proposed total capital investment of $425 million far exceeds the proposed capital investment of the other two Applicants in the region.

While the project has generated substantial local support, the Board noted that Lago may create some traffic concerns for certain neighbors. The Board recommended that the Commission work with Lago to address any potential impacts this facility may have on the local community.

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