Long Island’s only casino, Jake’s 58 in Islandia, opened in February of 2017 and has had a hugely successful run — despite many weeks of closure during the — providing millions to Suffolk County Regional Off-Track Betting Corporation (OTB) and to Suffolk County taxpayers.
Delaware North, the global food service and hospitality company that has been operating the casino’s electronic gaming machines for OTB, has sold Jake’s 58 Casino Hotel to Suffolk OTB for approximately $120 million.
“Owning and managing Jake’s 58 will allow Suffolk OTB both in the short term and the long term to deliver to our beneficiaries in the state and county,” said Suffolk OTB President James LaCarrubba in a statement. “We are grateful to Delaware North for partnering with us to make Jake’s 58 such a success and for ensuring a smooth transition.”
Sometime after New York State decided to allow horse racetracks and pari-mutuel betting facilities to operate video gaming terminals (VGTs), what was the Marriott Islandia hotel came on the real estate market in 2016. Suffolk OTB looked at the 10-story, 227 hotel room complex on the Long Island Expressway’s north service road, for a casino site. After having filed for bankruptcy in 2011, however, OTB was not in a financial position to complete a purchase.
Suffolk OTB then partnered with Delaware North, which bought the former Marriott for $40.41 million and renamed the facility as Jake’s 58 Casino Hotel. The moniker ‘Jake’s’ is derived from the Jacobs family, which has owned Delaware North for more than a century. The “58” was added as a nod to the nearest exit number to the casino off the LIE.
Since reopening in September following a mandatory suspension of operations because of COVID-19, gamblers have wagered approximately $1.7 billion on Jake’s VGT machines, according to Casino.org. The casino kept more than $104.2 million of the bets.
Forty-five percent of VGT gross gaming revenue is allocated for the New York State Education Fund. Another 10 percent goes towards the central video gaming system vendor, terminal providers, and New York Lottery. The casino retains the remaining 45 percent.
The purchase, said OTB officials, is expected to save Suffolk OTB some $13 million a year in rental and management fees paid to Delaware North, which had held a 50-year contract to manage the casino for OTB.
County Pros and Cons
Suffolk County Executive Steve Bellone last week demanded that Suffolk OTB officials provide him with copies of the contract to buy the casino, as well as detailing the agency’s plan to operate and manage the casino.
Bellone had also requested that the sale be delayed so that an “independent consultant” could review the transaction.
“This is an agency [OTB] that just recently emerged from bankruptcy,” Bellone said at a press conference last week. “Every dollar that is not spent wisely, every dollar that is wasted, is a dollar that has been taken out of Suffolk County taxpayers’ pockets,” he declared.
The sale was completed nevertheless.
In a statement, LaCarrubba said taxpayers would have no role in paying for the purchase, adding the deal had been approved by the state Gaming Commission.
“As we have repeatedly discussed with Suffolk County officials, as the debt service on the transaction is less than we are currently paying in management fees and rent, this is an immediate net positive for taxpayers, a benefit that will only grow in time,” LaCarrubba added.
Suffolk Legislators of both parties placed their bets against Bellone.
“They’re [Suffolk OTB] doing better than anyone else in the state,” said the Suffolk County Legislature’s Presiding Officer Rob Calarco, a Democrat from Patchogue. “I’m not concerned about their ability to pay back the loan.”
The Legislature’s Republican Leader Kevin McCaffrey (R-Lindenhurst) said “It’s a done deal. The deal closed.”
“Several entities have approved the sale…the Gaming Commission, the bank, and the bankruptcy court, which have all done their due diligence.
“OTB will be making even more money for the County. I don’t know why, at this point, the County Executive is continuing this fight,” McCaffrey mused. “I don’t know what’s behind his opposition to this.” “It’s a lot better deal than when Bellone sold the Dennison building [the County’s governmental headquarters] for a one-shot budget boost,” he declared.
