New York casino contracts are ‘absolute petri dish for corruption’

Krueger’s experience is just one small piece of a fiercely competitive process involving the most powerful politicians in New York. Those officials will soon have a hand in deciding who will win the opportunity to build what could become one of the most expensive — and profitable — casinos on Earth. The competitors seem to be sparing no expense to influence anyone and everyone with the ability to boost their bids.

Lobbying firms behind 10 New York City metro area casino proposals have made at least $7.2 million over the past 14 months speed dialing decision-makers on behalf of gaming operators like Bally’s and Caesars and their real estate partners, according to a POLITICO analysis of public records. Some even worked for competing clients.

And that is a fraction of the money being spent. The contestants are shelling out unreported sums for consulting, political strategy and public relations — contracts that are not required to be made public, unlike lobbying deals. Good government groups worry the mix of big money, fierce competition and political signoff creates a breeding ground for corruption.

“It seems like every lobbyist in town is eventually going to have a casino client,” Manhattan Borough President Mark Levine said in an interview. “Even one of these bids will probably be amongst the hardest-fought public campaigns, and to have ten happening at the same time in New York City is just totally unprecedented. I don’t think New York City has ever seen anything like what we’re about to witness as the bids heat up.”

The state opened the bidding process in January to operate three downstate licenses. Two existing “racinos” in Queens and Yonkers are considered frontrunners for two of the licenses to expand their limited operations, with another eight, and potentially more, competing for the likely one remaining permit. Each bidder is offering the state at least $500 million — a mandatory entry fee for access to the nation’s largest untapped gaming market. The selection process could last several years.

For now, it’s the lobbyists who are cashing in.

The Malaysian-based Genting Group has spent at least $2.7 million on firms to lobby for the expansion of the Resorts World facility it operates at the Aqueduct Race Track in Queens since last January — the most any bidder has shelled out, according to reports with the state’s Commission on Ethics and Lobbying in Government.

Genting is well-positioned: key Queens politicians have declared their support and unionized workers in the politically-influential Hotel and Gaming Trades Council are already employed at Resorts World and would likely benefit from its expansion. Competitors consider Genting and MGM Resorts International, which runs a gaming site in Yonkers, likely to win two of the licenses, though it’s not guaranteed. That leaves a third license for one of the other bidders.

One of Genting’s lobbyists, Moonshot Strategies — which launched after its co-founders backed Eric Adams’ mayoral campaign — has made $350,000 on the process, records show. Adams is among the elected officials with input in the selection process, but does not have the final say.

Moonshot’s Jason Ortiz and Jenny Sedlis, who raised $7 million to support Adams’ 2021 election, are also lobbying for a dueling casino project from New York Mets owner Steve Cohen, and have profited from two others — a proposal from the Bally’s Corporation in the Bronx and an existing Rivers Casino & Resort in Schenectady.

Moonshot has made $182,000 lobbying for Cohen since last January, according to public records. Cohen is expected to partner with Hard Rock International on the prospective casino next to Citi Field.

They’re one of seven firms lobbying for Cohen, who has spent at least $685,390 trying to win over politicians and other officials with sway over the city’s nascent gambling industry.

Other firms working for Cohen include Hollis Public Affairs and Dickinson & Avella, which previously lobbied for Genting. Hard Rock, which would operate the prospective casino, has hired Actum LLC — which is also doing public relations for Genting — and Green Book Strategies. Tusk Strategies is also consulting on the project.

The vast lobbying apparatus behind the different bids has touched nearly every conceivable political and governmental player that would be involved in reviewing the proposals or evaluating local investments bidders might make to win support. The firms behind Cohen’s bid, for example, have lobbied members of the state gaming commission, numerous state legislators and City Council members, top aides to Mayor Eric Adams, Queens Borough President Donovan Richards, Council Speaker Adrienne Adams, the Department of City Planning, the Department of Parks and Recreation and the Metropolitan Transportation Authority.

“Massive amounts of money are pouring into the political system to try to influence these siting decisions. It’s an absolute petri dish for pay-to-play corruption and influence peddling,” said John Kaehny, executive director at the watchdog group Reinvent Albany.

To be sure, no one has suggested corruption has taken place as part of the ongoing process in New York, but the legalization of casinos in other states has often presaged pay-to-play scandals.

In Louisiana, which sanctioned riverboat gambling in 1991, former Gov. Edwin Edwards went to jail about a decade later for racketeering, conspiracy and extortion related to the awarding of licenses. In Alabama, four state senators, three lobbyists and two casino owners were indicted in 2010 for taking part in a scheme to trade campaign donations for favorable votes on a bill to allow gambling. In Illinois, impeached Gov. Rod Blagojevich was convicted in 2011 of crimes including an attempt to extort a horse-racing track owner in return for his signing a bill favored by the racetrack industry.

Back in New York, Ortiz and Sedlis, while lobbying for Cohen, also made $80,000 in 2022 working for a competing bid from Bally’s, which announced plans last month for a casino on former President Donald Trump’s eponymous Bronx golf course. The contract lasts through the end of March, according to records, but Ortiz said Moonshot terminated it at the end of February.

Moonshot also has a contract with Rivers Casino & Resort in Schenectady, but Ortiz said they will not advise the company on its potential plans to bid on a downstate license. He did not comment further on the arrangement.

Moonshot is hardly alone in double-dipping.

Peter Ward, who ran the hotel workers union before founding his own lobbying firm, is representing both Genting and Bally’s. Genting has paid Ward Strategies $336,000 since last January while Bally’s has shelled out $70,000.

Albany Strategic Advisors, a lobbying firm based in the state capital, has made $420,000 on Genting’s bid and $140,000 on Bally’s during the same time frame.

Neal Kwatra — who spearheaded the robust political operation of the hotel workers union before founding Metropolitan Public Strategies — is also working on both proposals, he confirmed. His earnings are not made public since he is consulting on strategy rather than lobbying elected officials.

Kwatra, Ward and Allison Lee, the head of Albany Strategic Advisors, have worked for Genting for years preceding the bidding process. They all declined to comment.

Lobbying firm Bolton St. Johns has made $120,000 from Genting, while also working for Caesars Entertainment on a bid to open a casino in Manhattan. The Reno-based gambling magnate is partnering with the city’s top commercial landlord — SL Green — and Jay-Z’s Roc Nation to create a casino with a swank, balcony-style bar overlooking Times Square.

Backers of the Caesars proposal are paying four other firms: lobbying companies Connective Strategies and Ostroff Associates, consulting giant BerlinRosen, and Oaktree Solutions, the consulting firm run by Frank Carone, City Hall’s recently-departed chief of staff. So far the bidders have spent at least $736,871 trying to persuade Manhattan politicians like Krueger, who are skeptical about plans for a casino in their borough.

Despite Manhattan politicians’ consternation over gambling, SL Green has stiff competition.

The Related Companies — one of the biggest developers in the country, and the force behind Manhattan’s Hudson Yards — retained Tonio Burgos & Associates to lobby alongside an in-house team including executive Charles John O’Byrne on a proposal its CEO has called “the highest-end casino probably ever built.”

The proposed casino on the far west side of Manhattan would be housed within a 1,500-room resort boasting 20 restaurants, a nightclub and theater.

Public records show Related has paid the Burgos firm $140,000 so far, and its Las Vegas-based partner, Wynn Resorts, has spent $192,000 on lobbyists, including Mercury Public Affairs and Empire Consulting Group. Related also has a robust in-house lobbying operation that isn’t fully captured in public records.

“Casino operators have hired some of the best in the business up in Albany; it’s understandable given how much money is at stake,” said state Sen. Brad Hoylman, whose district includes Hudson Yards and who has voiced skepticism on the prospect of a casino in the area. “In my mind, no amount of hard sell from a lobbyist or a casino operator is going to trump the local opinion of my communities, where several of these casinos have been slated.”

But the hard sell is sometimes too tempting for an influence-peddler to turn down.

Douglas Walker, an economist at the College of Charleston, authored a 2013 paper linking casino legalization to political corruption. He said one contributor is the highly competitive process around winning just a handful of operating licenses, like the one New York has adopted.

“Any time you have a situation where there’s restricted supply and you need the blessing of politicians or bureaucrats, there’s potential for corruption,” Walker said in an interview. “The more valuable the right to operate, the more you would expect those things to go on.”

Just how valuable? A casino in New York City could generate as much as $2 billion in revenue annually, and $600 million in operating profit, according to the commercial real estate services firm CBRE.

Walker noted campaign contributions to politicians and money spent on lobbying by casino operators increased dramatically after commercial casinos expanded beyond Las Vegas and Atlantic City in the 1990s. While lobbying and donating to politicians is not illegal, “Any time you see that, if there are legal contributions to politicians, there’s also the potential that there’s stuff going on under the table,” he added.

As for lobbying by casino bidders in New York, the total spend likely exceeds reports on file with the state’s ethics watchdog, the Commission on Ethics and Lobbying in Government, Kaehny said. “Maybe half of all the activity is being captured by these disclosures because a lot of people just don’t want to disclose what they’re doing and it’s very unlikely they’ll get in trouble for it,” he added.