Gambling Parlor in Nassau County

Nassau Regional Off-Track Betting has chosen the vacant Fortunoff store at The Source mall in Westbury to house a gambling parlor with up to 1,000 video slot machines and table games, the agency said Tuesday.


OTB, which considered more than a dozen potential sites, has begun negotiations with Fortunoff bondholders and lenders. They took ownership of the mall in 2012 after a foreclosure auction found no buyers willing to pay off the $128 million debt on the site.

The video lottery terminals will occupy about 15 percent, or 30,000 square feet, of the 200,000-square-foot, four-story building — roughly the same footprint once occupied by Fortunoff’s houseware and jewelry departments, OTB said.

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“The remaining portions of the structure will feature first-class amenities such as restaurants and a food court, administrative offices and extensive surveillance and security,” OTB said in a statement.

OTB said it will not purchase or lease the rest of the mall, which has several vacant storefronts. The rest of the shopping center will not include gaming.

Officials did not disclose the purchase price for the gambling parlor. Earlier this month, OTB officials authorized up to $100 million in tax-exempt bonds to buy and develop a VLT site, but said the project could cost significantly less.

The Fortunoff property met a key criterion for OTB: the need for at least 1,000 parking spots. A multilevel parking structure is located in the rear of the shuttered retail store.

Nassau OTB president Joseph Cairo projects the site will generate nearly $20 million in annual revenue for OTB and the county.

The gaming parlor is expected to open next year. OTB still must select an operator for the facility.

OTB said the Fortunoff site was selected “after extensive considerations were given to each and every site offered. This facility provides a centralized location with ample parking and easy access to major thoroughfares as required by the New York State Gaming Commission.”

Selection of the Fortunoff site has been rumored in the local community for weeks, allowing Westbury and Carle Place residents and elected officials to begin mobilizing against the plan.

Westbury Mayor Peter Cavallaro complained that Fortunoff is located within a few blocks of at least 300 single-family homes and less than a mile from three schools.

“It’s not suitable for a residential community,” said Cavallaro, who also detailed his concerns in a Dec. 23 letter to Cairo.

Kim Ribarich, a Westbury resident who helped organize a Facebook page opposed to the casino plan, said “this location is too close for comfort. We are not opposed to casinos. Just don’t put it there.”

Cavallaro said the gaming parlor would add to traffic on Old County Road and nearby residential streets — including during late night hours — and lead to an increase in crime and gambling addiction.

He plans to host a private meeting on Jan. 8 with state and local elected officials to discuss the plan. A public meeting also is scheduled for Jan. 21 at Carle Place High School.

OTB is exempt from most zoning requirements and the project would not be subject to local zoning boards, Cavallaro said.

The Mall at the Source, opened in 1997, is in one of Nassau’s busiest commercial districts.

But the mall has struggled in recent years after Fortunoff, its onetime anchor tenant, filed for bankruptcy and shut down in 2009. Other major retailers have since left the mall. A Cheesecake Factory and other stores remain at the mall.

The loan balance on The Source mall is $124 million, while Fortunoff has a separate $46 million loan that is in default, according to Trepp, a company that tracks information on commercial loans.

Records show the Fortunoff building is owned by Westbury Property Investment Company and Westwood LLC. The Manhattan law firm of Kramer Levin Naftalis & Frankel LLP has begun foreclosure proceedings on the site, records show. Natan Hamerman, the law firm’s special counsel, who represents the firm in foreclosure proceedings, could not be reached for comment Tuesday.

State legislation enacted in 2013 that authorized construction of up to four upstate casinos also allowed Nassau and Suffolk counties to build gambling parlors with up to 1,000 video slot machines and table games such as roulette, baccarat and blackjack.

In October, Suffolk Off-Track Betting Corp. closed on a $10.95 million deal to buy a 31-acre former Medford movie multiplex for its gaming parlor.

The move came after the board of directors of Suffolk OTB voted to borrow as much as $90 million for construction of the VLT parlor and immediately pay off OTB’s creditors.

Suffolk is expected to break ground on the facility in early 2015 and to open during the year. It will be run by Delaware North, a Buffalo-based gaming and hospitality company.

Suffolk OTB president Phil Nolan has declined to estimate revenues, noting that the agency, coming out of bankruptcy, must pay creditors $17 million over the next three years.

Updated December 30, 2014 10:20 PM



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