Northeast states are increasingly looking to gambling as a means of budget relief and a source of tax revenue. Policy experts have their doubts.
The Rockefeller Institute of Government in Albany recently issued a new report entitled "State Revenues from Gambling: Short-Term Relief, Long-Term Disappointment." The paper finds states turning to gambling as a possible quick fix for revenue woes have often been disappointed with the results.
Study author Lucy Dadayan says that states traditionally look to expand gambling in the wake of an economic slowdown. "Many states don't want to raise taxes, income tax or sales tax, and another motivation is to keep the gamblers in the state, so they want to promote tourism, they want to promote economic development."
Dadayan says data showed time after time, revenue from casino gambling would go from "strong" in its first year, then descend, eventually becoming "not sustainable." "It slows down in the second and subsequent years, and they see negative growth over the longer period of time."
Casinos and racinos already exist in New York, and more are being built. Perhaps the biggest victim of a crowded market is Atlantic City, which had the highest foreclosure rate in the nation, according to RealtyTrac. Lost casino jobs after four of the city's casinos folded has been cited as a factor, which has also resulted in higher property taxes.
Dadayan sees New Jersey as a bellwether for New York's burgeoning casino industry. "The local communities are gonna suffer. I'm not optimistic about the future of casinos. In the long run for sure they are gonna have a very negative impact on the local communities."
Possible impacts include crime, an increase in bankruptcy filings, the shuffling of businesses and residents as neighborhoods shift in response to the waxing and waning of local gambling halls. Dadayan says the number of gamblers doesn't change, another factor in the casino conundrum: "The development of new casinos doesn't really affect that many new gamblers. It's just a shift of gamblers from one location to another, but not really growth of gamblers, and that's a clear indication why states are suffering in the long run."
That conclusion is backed up by several studies warning of gambling saturation in the Northeast, where New York and Massachusetts have casinos in the development phase. The Oneida nation, which has been operating casino halls in New York, is concerned opening additional casinos could threaten its operations.
American Indian casinos are also on Dadayan's watch list: "For example, the two big casinos in Connecticut have suffered a lot in the last decade since more states have expanded gambling, in the neighboring states."
- Read (or download) the full report in PDF format HERE.
In December, Turning Stone Resort and Casino spokesman Joel Barkin told WAMC gambling regulators in New York need to be cautious as they move forward. "New York state needs to be very careful about the future, given the reality that gaming proliferation will only increase around in border states and elsewhere, and how that impacts the economic development in New York state, which is something that we have been very focused on and very vocal on: that we should not, in New York state, be approving any gaming that is going to be cannibalizing existing economic development."
The Oneida aren't sitting on their hands: in June they opened the $20 million Yellow Brick Road Casino just outside of Syracuse in Chittenango, 60 miles east of Tyre, where the state OKed construction of the Lago Resort and Casino. The tribe has been dead-set in opposing that project.
Officials with Schenectady's new Rivers Casino declined comment. The Cuomo administration did not return a call for comment.
