the unpromising future of casino gambling

update: Cuomo on Declining Revenues (July 16, 2014)  Gov. Andrew Cuomo, when asked by reporters yesterday his reaction to predictions of reduced casino revenues due to oversaturation in the Northeast gaming market, responded (in “Cuomo: Size of NY casino play depends on investorsCapital New York, July 15, 2014) :

abacus “The private market, which reads Moody’s, which does this for a living, which is going to invest their money, will make a determination as to what scale and scope the market can support. And they will then build the buildings and employ people and run the business because they think it’s a good business to run.”

The Governor went on to say, “I’m sure they will propose what they believe will be successful.” Cuomo apparently was not concerned, as he told the reporters, “The state isn’t building any casinos. The state isn’t spending any money here, right? These are private companies which normally know what they’re doing.”

The questions for the Governor came at a conference in Niskayuna, where he was announcing the creation of a $500 million power electronics consortium led by General Electric in Albany that would give companies a a place to research and develop important new technologies. The State would pay $135 million to build the infrastructure for the consortium.  If he wasn’t asked at the press conference, we’d like to ask the Governor:

  1. checkedboxs Shouldn’t the Gaming Facility Location Board pause its review of casino applications and ask the applicants to reassess the “scale and scope the market can support” and to adjust their proposals, in light of the experts’ downward predictions? And,
  2. Why take a risk with the financial, fiscal and social problems caused by gaming, when Upstate development can be based on future-oriented, productive industries such as the technology represented by the Power Electronics Consortium?

[original posting]

plungegraphsmY There’s been a flood of recent articles and information pointing to the increasing unlikelihood of any casino fulfilling the glowing promises of revenues and resulting tax reductions and jobs made by its boosters.  For example, since we wrote “psst: the casino cash cow has too many calves” on June 21st, we’ve seen:

  • Moody’s downgrades U.S. gaming industry“, TU Capitol Confidential (July 1, 2014, by Benjamin Oreskes”)    Moody’s report notes a “strong indication that U.S. consumers will continue to limit their spending to items more essential than gaming, even as the U.S. economy continues to improve.”
  • Wait on casino licenses” (Albany Times Union editorial, July 6, 2014).  Here’s part of their discussion:

“These pessimistic prognostications merely underscore what is already known in New York. A lot of people will have to spend a lot of money at the new casinos if they are to deliver what those who pushed the state constitutional amendment had promised: job growth, increased school aid and lower property taxes. Developers of the proposed gaming resort for Schenectady, for example, predict attendance there would be around 7,500 on weekdays and 10,000 on weekend days. It’s hard not to be skeptical.

plungegraphsmBlack “The problems in other states suggest that the long-term success of New York’s planned casinos is dubious. And when casinos fail, all you have left is unemployment, empty buildings that can’t pay taxes and calls for a government bailout to rescue a struggling industry.”

  • Trump Plaza Casino In Atlantic City Expected To Close, Owners Say” (Huffington Post/AP, July 12, 2014):  “Atlantic City’s crumbling casino market disintegrated even further Saturday as the owners of the Trump Plaza casino said they expect to shut down in mid-September. . .  . If Trump Plaza closes, Atlantic City could lose a third of its casinos and a quarter of its casino workforce in less than nine months.”
  • Gambling on Casinos in New York” (New York Times editorial, July 13, 2014): “A five-member state board appointed by Gov. Andrew Cuomo is supposed to choose four sites and the companies that can build on them by this fall. This seems much too hurried. As Moody’s is warning, it is time to beware of all the promotional hoopla and realize that casino gambling does not always deliver on its promise.”
  • Fred LeBrun: “Minds once lost can be found again” (Albany Times Union, July 12, 2014): “We plunge ahead without so much as a nod from our leading politicians that wagering on casinos as an economic development tool may be a sucker’s bet and that just maybe we ought to take a harder look at ‘none of the above’ for the time being, whether there’s now a constitutional amendment in place allowing casinos or not.

    . . . “But not a peep. It’s a credit to how much can be bought in New York state for the $11 million the gaming industry spent in lobbying the same top pols.

    plungegraphsmMatte

    “It’s predictably annoying that our State Gaming Commission continues to take a strong stand in defense of the gambling crowd. It’s become the industry’s prime booster. . . .

    “What’s bothersome about the boosterism is that the Gaming Commission is also by statute the regulator of all gambling in New York. Its pronouncements show bias, which is at the very least inappropriate, unwise and not a confidence builder for the commission’s broader and thornier mandate to do what’s best, gambling-wise, for all New Yorkers even if that could ultimately mean saying no to everybody.”

    – each of the above articles is worth reading in full –

threemonkeys So, what are the unflinching boosters of the Schenectady casino thinking these days?  Mr. Mayor Gary McCarthy?  Madame Council President King? Stockade Association President Mary D’Alessandro?  The Trustees and Acting President of Schenectady County Community College?  The Me-too City Council members: Mootoveren, Kosiur, Perazzo? The Council’s self-appointed “financial analyst” Carl Erickson? Philip Morris, CEO of Proctors (and chief instigator and negotiator for what we like to call the FairGame Concert Cartel)?

How big of a gamble are the casino cheerleaders willing to take?  How do they weigh the self-interested promises of Galesi Group and Rush Street Gaming against the prospect of the probable increase in crime, problem gambling, and domestic violence, and a decrease in property values and the livability of the Stockade neighborhood?   Are they willing to accept the soul-deadening tradeoff of adopting a soak-the-poor fiscal policy, and the growth of problem gambling among our elderly and our college students, in the hope of obtaining increasingly uncertain future payments from the Casino, which they hope will appease the City’s taxpayers?  Does the shiny future they predict for Schenectady include the sight of a failing casino project along Schenectady’s riverfront and the inevitable request for tax breaks and financial assistance that we can expect once gaming revenues shrink along the Mohawk?

smallquestionmark Perhaps the most important question is: Do any of the so-called leaders mentioned above have the courage to stand up and ask the Gaming Facility Location Board to reject the Schenectady casino proposal, or at least to put off granting any license for the Capital Region, until it is much more certain that the jobs and revenue projections are realistic, given the tidal wave of negative predictions about the industry’s prospects?

Don’t forget: the Location Board has the power to reject all of the applications if none of them appears to meet the goals and requirements set up in the enabling statute and the Request for Applications.

As is stated in Section IV. A of the Request for Applications to Develop or Operate a Gaming Facility in New York State [Adobe pdf. version] [“RFA”] (at page 19):

In accordance with PML Section 1314.3, “Within any development region, if the commission is not convinced that there is an applicant that has met the eligibility criteria or the board finds that no applicant has provided substantial evidence that its proposal will provide value to the region in which the gaming facility is proposed to be located, no gaming facility license shall be awarded in that region.”

And, See RFA Sec. III  [at 17]

M. State’s Reserved Authority.

In addition to any authority set forth elsewhere in this RFA, the Board reserves the authority to:

3. Amend the RFA and direct Applicants to submit modifications to their Applications accordingly;

5. Reject any or all Applications received in response to this RGA, and reissue a modified version of this RFA;

6.  Withdraw the RFA at any time, at the sole discretion of the Board.

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