New York Gov. Andrew Cuomo urged voters to approve a referendum that would permit construction of up to seven new casinos so that the state could corral the $1.2 billion in revenue that residents were spending in gambling joints in bordering jurisdictions. “We literally hemorrhage people from the borders who go to the casinos,” he said Tuesday. He envisions $340 million in taxes on that recaptured revenue, which could fund schools and tax cuts, as well as create 10,000 new jobs. If New Yorkers want to lighten their wallets at the craps tables, he reasons, why not employ other New Yorkers to help them do it.
Cuomo got his way when voters approved the measure Tuesday, but if New York wins, it’s very likely that Connecticut and Pennsylvania lose — and Atlantic City gets hammered, again. Empire State voters gave the green light to the construction of ClassIII casinos — that is, Las Vegas-style operations — by a 57 percent to 43 percent margin. The initial four projects will be built in economically hard hit regions such as the Catskills, the state’s Southern Tier near Binghamton, and in Saratoga, where the famed race track has made it an upstate gambling mecca for a century. Eventually, New York City would get its own casinos to complement the “racinos” being operated at the Yonkers and Aqueduct racetracks (and raises the question: when casinos open in Manhattan and Brooklyn, who’s going to leave town to play blackjack in the hills?).
Cuomo becomes the latest and among the last governors to wager that wagering will fund prosperity and employment. But it’s a bet that might not pay off as planned. In post-meltdown America, people have cut back on their play in places like Las Vegas (you know, Lost Wages), where gaming revenues have yet to match pre-recession levels. Elsewhere, every new casino that opens is snatching revenue from somebody else.
It’s becoming a game of diminishing returns.
Gross gaming revenue rose 4.8 percent in 2012 to $37.34 billion, according to the American Gaming Association, and state and local governments bagged $8.6 billion in taxes — which is why Cuomo wants a bigger piece of that action. But job growth was flat and the revenue increase is paltry against the supply of new casinos. Ohio opened four last year, for instance, and four states added properties. There were 979 casinos and racinos in operation at the end of 2012.
Yet even with the market close to a saturation point, new projects continue to come on line. Pennsylvania will add a 13th casino — scary number, that — in the Philadelphia area even as state casino revenues are flattening despite the opening the Lady Luck Casino in Nemacolin earlier this year. In Maryland, five new casinos could rise, further denting Delaware’s take, which dropped last year.
Despite the win at the polls, New York may be a little too late to the party. The Catskill region has been begging for a casino for decades to revive its faded economy. The once popular tourist area just 90 miles from New York City is dotted with run-down ghost towns where once-swank properties such as the Nevele and Grossinger’s featured headline performers in a mountain resort setting. But Pennsylvania moved first and the now operating Pocono casinos are just as close to Manhattan as are the Catskills, and Atlantic City sits two hours away.
America needs a lot of things — infrastructure such as bridges and a better electrical grid — and states such as New York have to do everything they can to raise revenues. But this country needs another casino about as much as it needs another Congress.