Email Misfire Adds Drama to New York Casino License War
In the battle between billionaires and billionaires to open a casino in the United States' last, great untapped gambling market, an erroneous email can become a dangerous weapon in the hands of an adversary.
That's a lesson that New York Mets owner Steve Cohen and Hard Rock International, his casino partner, have learned the hard way in recent weeks.
The central players in this episode of casino palace intrigue include Mr. Cohen's team and a rival casino interest: Las Vegas Sands, which wants to build a resort on the Nassau Coliseum site on Long Island, about 16 miles east of Mr. Cohen's proposed casino. development at Citi Field.
The problem started when one of Mr. Cohen's lobbyists accidentally sent a brief strategy note to a Sands executive.
At first glance, the contents of the email seemed relatively innocuous, reflecting a routine attempt by lobbyist Michael McKeon to contact Hofstra University, which opposes the Sands project due to its proximity to campus .
Mr. McKeon wanted to let the Cohen team know that he would ask Hofstra whether it planned to challenge Sands' attempt to move forward with its development plans even after a judge's ruling appeared to complicate control of the site .
“I am reaching out to Hofstra to see if they will oppose this move,” he wrote.
But in that one sentence, Sands supporters saw an abomination.
The email soon found wider circulation. Public accusations of conspiracy were made. Subpoenas were issued. And there was a brouhaha going on.
“The stakes are very high,” said Marc Edelman, a law professor at Baruch College who studies the gambling industry. “It is very rare that a company has the opportunity to bid for an oligopoly, if not a shared monopoly, over an entire sector.”
At stake are three licenses for full-fledged casinos in the New York City area, at a time when developers face a languishing office market. The opportunity has created a rush among the nation's top real estate operators and casino companies, including Hudson Yards developer Related Companies and its partner Wynn Resorts, which want to build a casino on Manhattan's Far West Side; SL Green Realty Corporation and Caesars Entertainment, which want to put a gambling hall in Times Square; and Bally's Corporation, which wants to create a gambling house in the Bronx at the site formerly known as Trump Golf Links at Ferry Point.
There is a casino proposal for Coney Island, and another for Midtown East. Larry Silverstein, the developer of the World Trade Center, is expected to submit a bid. This also applies to the two existing electronic gaming emporiums in the region, whose owners want to convert their properties into large-scale casinos.
But few contenders have been as aggressive in their public quest for community support as Las Vegas Sands and the Cohen team. To bolster its $6 billion bid, Sands has been courting Nassau County with sports clinics featuring megawatt soccer celebrity David Beckham and the golf star Collin Morikawa, and promises of millions of dollars in payments to both the City of Hempstead and Nassau County.
Some observers believe that two of the three licenses will go to the existing electronic gambling facilities at Aqueduct Racetrack and Yonkers Raceway. And due to political opposition to a casino in Manhattan, the third license may go to Queens or Long Island.
Mr. Cohen and Hard Rock have hired an army of consultants to convince politicians and community leaders that their $8 billion proposal for a casino next to Citi Field, known as Metropolitan Park, will enhance the local neighborhood with top-notch live music and abundant parkland. and thousands of jobs.
And they have paid one consulting firm, Mr. McKeon's firm Actum, at least $45,000 a month to support their efforts.
To that end, Mr. McKeon sent an email to Michael Sullivan, Mr. Cohen's chief of staff, and Sean Caffery, Hard Rock's Senior Vice President of Business and Casino Development, on January 5 at 4:19 p.m. According to an advisor on the project, the email would also go to Edward Tracy, the CEO of Hard Rock Asia. Instead, the email was sent to Tracey Edwards, a director at Sands, according to two people familiar with the email's trajectory.
By January 11, the contents of the email had found their way from Ms. Edwards' inbox to an op-ed in Newsdaythe Long Island newspaper.
On the night of January 16, Howard Kopel, the pro-Sands chairman of the Nassau County Legislature, had issued subpoenas to Susan Poser, the president of Hofstra University.
By January 17, the email itself — with Ms. Edwards' name redacted by a thick black box — had found its way onto an oversized poster board that served as a prop for a news conference whereupon Bruce Blakeman, the fervently pro-Sands Nassau County executive, accused Hofstra and the Cohen team of possible “collusion.”
“Hofstra is on an island alone, and now we have reason to believe that they are working or colluding with another casino applicant, and we want to know the nature of it,” Mr. Blakeman said in a recent interview. “Is it innocent, is it appropriate or is it shameful?”
A Hofstra spokesman denied there was any collusion between the university and Mr. Cohen's bid. “Hard Rock has had no communication whatsoever with Hofstra University or its president,” said Gina Massiel Cadahia, a spokeswoman for Hard Rock, said.
Mr. McKeon did not respond to requests for comment. Neither does Mrs. Edwards.
But even if Hofstra and Cohen's bid had spoken, the argument that such communications were illegal is unlikely to hold water, said Bennett Liebman, a government attorney in residence at Albany Law School.
State Gambling Rules prohibit collusion among competitors to prevent casino bidders from conspiring for their mutual benefit. An example of this is proposing artificially low tax rates, Mr. Liebman said, adding: “It's a nice topic of conversation, but I don't think it's really a valid legal argument.”
The state's process for choosing a casino site is progressing, albeit slowly. The State Gaming Commission has collected answers to hundreds of questions from potential bidders. Thirty days after the commission formally releases the answers to these questions, bidders' tenders will be in, and their arduous journey through the approval gauntlet will begin.
The email has given supporters of the Sands proposal early ammunition. It has also spotlighted the enormous amount of money that casino competitors pour into shaping the politics surrounding their bids – from lucrative contracts with lobbyists to generous political donations to Governor Kathy Hochul, who effectively controls the Gaming Commission.
The email outage also underscores one of the vulnerabilities of the Sands proposal: opposition from Hofstra, Long Island's largest private university and a key community stakeholder. The school board wrote this in a letter open letter that the location at the Nassau Coliseum was a “completely inappropriate location for a casino.”
“Colleges are places that uplift people and prepare them for a better life,” George Krug, a Hofstra alumnus, said at a recent public hearing. “Casinos are places that lift and shake people until all the money falls out.”