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Email Misfire Adds Drama to the War for a New York Casino License - NYT

An errant email has led to collusion accusations and subpoenas, illustrating the cutthroat environment surrounding the battle for a casino license in New York.

Jan. 26, 2024, 3:00 a.m. ET

In the billionaire-versus-billionaire contest to open a casino in the United States’ last, great untapped gambling market, an errant email can become a dangerous weapon in an opponent’s hands.

That is a lesson that Steve Cohen, the New York Mets owner, 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 at the Nassau Coliseum site on Long Island, roughly 16 miles east of Mr. Cohen’s proposed casino development at Citi Field.

The problem began when one of Mr. Cohen’s lobbyists inadvertently sent a short strategy note to a Sands executive.

At first blush, the substance of the email seemed relatively harmless, reflecting a routine effort by a lobbyist, Michael McKeon, to touch base with Hofstra University, which opposes the Sands project because of its proximity to the campus.

Mr. McKeon wanted to let the Cohen team know that he would ask Hofstra if it planned to contest Sands’s effort to proceed with its development plans, even after a judge’s ruling seemed to complicate its control of the site.

“I am checking with Hofstra to see if they will oppose this move,” he wrote.

But in that single sentence, Sands supporters saw an abomination.

The email quickly found wider circulation. Public accusations of collusion were made. Subpoenas were issued. And a brouhaha was underway.

“The stakes are very high,” said Marc Edelman, a professor of law at Baruch College who studies the gambling industry. “It is very rare that any business has the opportunity to bid for an oligopoly, if not a shared monopoly, over an entire industry.”

At stake are three licenses for full-fledged casinos in the New York City area, at a time when developers are facing a languishing office market. The opportunity has caused a stampede among the nation’s leading real estate operators and casino companies, including the 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 betting 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 World Trade Center developer, is expected to bid. So are the region’s two existing electronic game emporiums, whose owners would like to transform their properties into full-scale casinos.

But few contenders have been as aggressive in their public pursuit of community support as Las Vegas Sands and the Cohen team. To bolster its $6 billion bid, Sands has courted Nassau County with sports clinics featuring the megawatt soccer celebrity David Beckham and the golf star Collin Morikawa, and promises of multimillion-dollar payments to both the town 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 because of political opposition to a Manhattan-based casino, the third license may be headed 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 invigorate the local neighborhood with top-tier live music, bountiful parkland and thousands of jobs.

And they have been paying one consultancy, Mr. McKeon’s firm, Actum, at least $45,000 a month to aid their efforts.

To that end, at 4:19 p.m. on Jan. 5, 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. The email was also supposed to go to Edward Tracy, the chief executive of Hard Rock Asia, according to a consultant on the project. Instead, the email was sent to Tracey Edwards, a Sands executive, according to two people familiar with the email’s trajectory.

By Jan. 11, the contents of the email had found their way from Ms. Edwards’s inbox to an opinion piece in Newsday, the Long Island newspaper.

By the night of Jan. 16, Howard Kopel, the pro-Sands presiding officer of the Nassau County Legislature, had issued subpoenas to Susan Poser, the president of Hofstra University.

By Jan. 17, the email itself — with Ms. Edwards’s 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 at which Bruce Blakeman, the ardently pro-Sands Nassau County executive, accused Hofstra and the Cohen team of potential “collusion.”

“Hofstra is on an island by themselves, and now we have reason to believe that they are coordinating, 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 nefarious?”

A spokesman for Hofstra denied there had been any collusion between the university and Mr. Cohen’s bid. “Hard Rock has not had any communication with Hofstra University or its president,” Gina Massiel Cadahia, a spokeswoman for Hard Rock, said.

Mr. McKeon did not respond to requests for comment. Nor did Ms. Edwards.

But even if Hofstra and the Cohen bid had been talking, the argument that such communication was illegal is unlikely to hold water, according to Bennett Liebman, a government lawyer in residence at Albany Law School.

State gambling regulations forbid collusion among competitors to prevent casino bidders from conspiring for their mutual benefit. An example would be proposing artificially low tax rates, Mr. Liebman said, adding, “It’s a nice talking point, but I don’t think it really is a valid legal argument.”

The state’s process for choosing a casino site is moving forward, albeit slowly. The State Gaming Commission has been putting together responses to hundreds of questions from potential bidders. Thirty days after the commission formally releases the answers to those questions, the bidders’ applications will be due, and their laborious procession through the approvals gantlet will begin.

The email has given early ammunition to supporters of the Sands proposal. It has also cast a spotlight on the immense amount of money that casino competitors are plowing into shaping the politics surrounding their bids — from lucrative contracts with lobbyists to lavish political donations to Gov. Kathy Hochul, who effectively controls the Gaming Commission.

The email kerfuffle also underscores one of the Sands proposal’s vulnerabilities: the opposition of Hofstra, Long Island’s largest private university and a key community stakeholder. The school’s board of trustees wrote in an open letter that the site by the Nassau Coliseum was an “entirely inappropriate location for a casino.”

Colleges are places that lift people up and prepare them for a better life,” George Krug, a Hofstra alumnus, said at a recent public hearing. “Casinos are places that lift people up and shake them until all the money falls out.”

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