NY: Suffolk OTB plans to buy Jake’s 58 Casino Hotel

Suffolk OTB plans to acquire the company that owns and manages Jake’s 58 Casino Hotel in Islandia, New York, from Delaware North in a deal estimated at $120 million, including annual management fee.

Officials of both companies said Wednesday that OTB is in talks to buy the property, including the 228-room hotel that houses the casino, as reported by Newsday.

Buying the property on the Long Island Expressway North Service Road will save Suffolk County Regional Off-Track Betting Corp. about $13 million a year in rental and management fees paid to Delaware North, get OTB out of the last 46 years of its contract with the company and put OTB into the hotel business.

In a statement, Suffolk OTB spokesman Jon Schneider said taking over the casino will benefit Suffolk taxpayers by cutting costs and putting more cash into county coffers. A clause in Delaware North’s contract to run the casino allows Suffolk OTB to buy the property, he said. "Simply put, ownership of the Jake’s 58 property and management of the casino hotel will put Suffolk OTB in a position to contribute more money to Suffolk County than it otherwise would, a benefit that will only grow in time," Schneider said.

Brian Hansberry, Delaware North’s president of gaming operations, said the company will continue to run the hotel and casino until the sale is completed. "We thank our management team and associates who have played a vital role in Jake’s 58 achieving incredible success since opening, and we look forward to working with SROTB on a smooth transition and wish them success," Hansberry said in a statement.

County Executive Steve Bellone said Wednesday that Suffolk OTB should put the brakes on the deal while officials conduct a review. Suffolk officials plan to hire consultant Morowitz Gaming Advisers to conduct a yearlong study of the plan.

Since it opened in February 2017, Jake’s 58 has consistently ranked among the highest earning video-lottery betting parlors in the state. Since reopening in September, the casino has raked in $1.748 billion in bets, or about $250 million per month, according to state Gaming Commission records. About 93% of those earnings were paid to bettors, an the rest was paid to Delaware North, casino vendors and the state public school system.

OTB sued Delaware North in October 2019, alleging that it used the casino as a "piggy bank" to cover the company’s construction costs, rent and other expenses. Delaware North countersued, and the two sides announced a settlement months later. Casino revenues helped Suffolk OTB escape bankruptcy last year by paying millions of dollars it owed to vendors.

Suffolk OTB chief executive Jim LaCarrubba, who took over the agency in December, has said he plans to expand Jake’s 58 by doubling its 1,000 video lottery terminals. OTB also has proposed building a 160,000-square-foot casino with restaurants, bars and an underground garage on property it owns in Medford.