Casinos are unlikely growth strategy for state

CASINOS ARE UNLIKELY GROWTH STRATEGY FOR STATE

Gov. Andrew Cuomo laid out his economic priorities in his recent State of the State address. Apparently, he has determined that the next gold mine for upstate New York are casinos, which have proven to be the most significant voluntary tax available to state governments.

The governor rightly points out that the state has been in the gambling game for some time, so now it’s time to do it right and get our cut. The following day he told western New Yorkers not to expect a casino anytime soon, so maybe that’s not all bad – at least until the rules change.

The fallacy of casinos as a regional economic growth strategy is best captured in a quote from Steve Wynn, a renowned casino operator, to a local businessman in Bridgeport, Conn.: “There is no reason on earth for any of you to expect for more than a second

that just because there are people here, they’re going to run into your restaurants and stores just because we build this building [casino] here.”

So the governor told us, “If we build it, they will come.” That seems to be the case, but like in the film Field of Dreams, those players will disappear into the high corn, never leaving the field.

Anyone who has traveled to the Seneca Niagara Casino in Niagara Falls must wonder how casinos are going to be the catalyst to economic development. More than 60 percent of residents of the city of Niagara Falls receive public assistance, 34 percent have income below the poverty level and unemployment is 11.3 percent – all after nearly a decade of the casino’s opening. In addition, disputed “exclusivity” payments that are being withheld from New York state and the city of Niagara Falls have made a difficult situation worse. The city is owed $60 million, which is challenging its ability to provide basic municipal services.

After a decade of operation, the casino is an island surrounded by parking lots, a couple of overflow hotels and dilapidated buildings. The promise of regional economic growth never materialized.

If casinos are the answer, the licenses must be granted with a broader view of regional economic development than the state and local governments getting the “vig.” Rather, the licensing requirements should include a comprehensive community reinvestment plan, including funding for urban or rural development, support of local human services agencies and cultural institutions – all as part of a private-public partnership. Using this framework, maybe it will become a regional economic success.

The casinos today remind me of a story from my youth. A relative who owned a saloon was also in the gaming business in the 1950s and 60s, long before it was well organized, taxed or legal. Years later, when I asked him about the business, he told me to always remember, “Only one side of the bar makes money.”

So it goes.

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