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GAMING AND RACEWAY

January 11,2011

Steve Cohen Dean G. Skelos

Office of the Governor Majority Leader
110 State Street New York State Senate
Albany, NY 12207 Capitol, Rm. 315
Albany, NY 12247

Robert Megna Sheldon Silver

New York State Division of the Budget Speaker
State Capitol New York State Assembly
Albany, NY 12224 Legislative Office Building, Rm. 932
Albany, NY 12248
Gordon Medenica
New York State Division of Lottery
1 Broadway Ctr, #700
Schenectady, NY 12305

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