Casino measure on state ballot

Saturday, October 26, 2013
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— Voters next month will be asked to make a bet on the state’s future.

On the back of the ballot is a proposition that would amend the state’s constitution and allow up to seven non-Indian-run, live-table casinos. If the proposition is voted down, there is the possibility of video gambling, like the kind at the Saratoga Casino and Raceway, expanding all over the state.

Both outcomes are a gamble, despite the rhetoric on all sides, because so much of the state’s casino landscape will be left to chance after the referendum. “The success or failure will be determined when the colors are filled in,” said John Sabini, former chairman of the state’s Racing and Wagering Board. “This [referendum] will give you the ability to get the ball rolling.”

If the proposition is approved and the state’s constitution is amended, the next phase would be the placement of four upstate casinos. One is likely to be in Saratoga Springs, according to gambling experts and state legislators.

Gov. Andrew Cuomo’s Upstate NY Gaming Economic Development Act, which was approved earlier this summer after some tweaking by the state Legislature, would allocate one casino to the Capital Region, Southern Tier and Catskills, with one of those regions also getting a second casino. Locations, casino operators, license fees and additional regulations would be left up to a siting board appointed by the state Gaming Commission, which has a majority of its members appointed by the governor.

Until the siting board begins its work, Sabini said, New Yorkers won’t know how successful this venture would be. “I think the long-term success of gaming depends on future decisions, like where licenses are granted and who they go to,” he said.

The state’s gambling landscape now includes scratch-off tickets at convenience stores, regular lottery drawings, Quick Draw in bars and restaurants, off-track betting parlors, harness and thoroughbred racetracks, video gambling at nine tracks known as racinos and more than a dozen live-table Indian casinos. The state is also surrounded by neighbors that allow casinos, except for Vermont.

Because of the state’s existing opportunities for gambling, Cuomo has argued that the introduction of non-Indian casinos would not be a major change around the state. He envisions casinos as the foundations for resort destinations that will recapture a portion of the money New Yorkers are gambling in neighboring states — a figure estimated at more than $1 billion a year — and attract out-of-state gamblers.

The major proponent of the amendment is the New York Jobs Now committee, a statewide coalition that includes business groups and labor unions that are actively campaigning statewide for passage of the referendum. The group’s funding so far, according to the state Board of Elections, has come from a racino operator and the Oneida Indian Nation, which operates Turning Stone Resort and Casino in Central New York, where the tribe has an exclusivity zone.

Another prominent supporter is the New York Gaming Association, which represents the state’s nine racinos, including the one in Saratoga Springs. Despite initial concerns about the proposed tax rates for the new casinos, a change in that formula and the threat of new video gambling parlors if the proposition failed were enough to gain the group’s support.

Groups such as the Institute for American Values, a New York City think tank that promotes a civil society, have been the most vocal critics of the casino expansion. Most of the opposition has come from small grass-roots movements, including a petition in Saratoga Springs.

Some of the anticipated benefits of the Upstate NY Gaming Economic Development Act are spelled out in the name, with proponents predicting thousands of new jobs, initially in construction, and a boost in upstate tourism spending.

Sabini believes the casinos can provide an economic boost if they’re done right. At the very least, he said, a “yes” vote would put “New York on an even playing field with virtually every state we border.”

There also would be revenue for state and local governments, with 80 percent of the tax revenue going to the state for education aid, 10 percent split between the host community and county and 10 percent split among the other counties in the region. The state Division of Budget estimates that the expansion of gambling could generate $430 million in annual revenue.

Based on the DOB’s projections, the Capital Region would get $35.4 million, with the money divided by the size of the counties in the region. Additionally, $11.4 million would be split between the county and local municipality hosting the casino.

None of this additional revenue is supposed to impact the support payments Saratoga County and Saratoga Springs receive from the state for hosting a racino, but the state Legislature could alter that agreement at any time.

During the process of advancing the casino amendment twice through the state Legislature, in 2012 and this summer, Cuomo also secured payments for the state from casino operators in Western and Central New York and the North Country. These agreements would result in millions of additional annual aid for the local communities and the state.

Opponents of expanding gambling say that beneath the glitz and glamour promised by casinos is a darker reality, where crime and problem gambling increase. They contend that any revenue generated by the casinos will end up being a regressive form of taxation, with lower-income people making up a disproportionate number of the gamblers.

Gambling experts and critics of casino expansion have voiced skepticism about the amount of revenue that could be generated by casinos in New York, saying the market is already saturated and new casinos would just cannibalize from other gambling options in the state.

If the projected revenues are real, state education funding would only increase by about 1 percent, which might not be worth the social costs of running a casino.

People on either side of the casino expansion debate whether casinos would pull business away from existing nearby restaurants, hotels and entertainment venues or attract new customers to the area. The Upstate Theater Coalition, a group of entertainment venues, was recently formed to express concerns about competing with the casinos.

There is some language in the bill about casino operators working with local entertainment venues. One idea floated for Saratoga Springs, if a casino goes there, would be for the casino’s entertainment venue to have dark days in the summer, so it wouldn’t detract from events at the Saratoga Performing Arts Center.

Most likely to compete with the new casinos are existing racinos in the state that don’t get a casino license.

“They should be worried if they don’t become a casino and a casino opens up next to them,” Sabini said.

The state’s horse racing industry and local officials in Saratoga County are concerned that casinos would compete with horse racing in the state. There are protections in the enacted casino legislation that ensure that gambling funding for purses, breeders and horsemen continues to rise with inflation. That protection, though, wouldn’t ensure that people continue to gamble on horse racing, which could jeopardize the stability of the New York Racing Association, operators of the Saratoga Race Course and two downstate tracks.

While the Capital Region, Southern Tier and Catskills are each guaranteed a casino, because of exclusivity agreements reached with Native American tribes in the North Country and Western and Central New York, there is no guarantee about where a casino will go in each region. The siting board will consider the economic impact, local support and other factors when determining where they will award a license, but the placement will also be dictated by where casino operators want to build.

“History shows us that casinos succeed based on proximity to markets,” Sabini said.

That’s why major casino operators are only interested in developing in New York City, where about half of the state’s population is located. Because New York City is off-limits for the first round of casinos, the conventional wisdom is that developers would want to be as close to downstate as possible, which is why the Catskills are the favorite to get two casinos.

In the Capital Region, the odds-on favorite for a casino is Saratoga Springs, where the Saratoga Casino and Raceway has already announced its intentions to vie for a license to offer live-table games. Earlier this year. officials announced plans to move forward with a $30 million expansion, including a hotel, restaurant and entertainment venue, which was viewed as a maneuver by the group to demonstrate that they’re serious about a major upgrade.

“Certainly at this point I would consider them a favorite,” Sabini said. “They’ve expanded, they’ve classed the place up a lot and they have certainly done very well with the cards they’ve been dealt thus far.”

But he said the broad language describing the siting process opens the door for another community in the Capital Region to secure a casino, even though no other private interests have publicly expressed a desire to develop a casino outside of Saratoga Springs.

Voters need to be aware that a “no” vote could still lead to expanded gambling in the state. The law detailing the first phase of casinos allows the state to sprinkle new video gambling facilities all over the state if the referendum fails. According to the state Legislature’s point men on gambling, state Sen. John Bonacic and Assemblyman Gary Pretlow, this failsafe was tucked into the law to discourage the state’s racinos from opposing the proposition.

Voter turnout Nov. 5 will likely impact whether the proposition is approved because support for expanding gambling in the state varies based on region. According to a recent Siena Research Institute poll, a majority of New York City voters said they oppose an expansion of casinos in the state.

Complicating this issue, though, is the language of the proposition, which promises job growth, increased funding for education and lower property taxes. When the Siena poll asked the question again, using the referendum language, 56 percent of New York City respondents said they supported it.

Across the state, there was a similar increase in support for the casinos when the question is phrased as it appears on the ballot.

The wording of the referendum was heavily criticized by good-government groups, opponents of casino gambling and advocates for gambling addicts, who said it hid the downsides of casino gambling, such as crime, addiction and competition for local businesses.

A Brooklyn attorney mounted a legal challenge to the language, arguing that the state Board of Elections was improperly supporting the measure by using advocacy language. His challenge was rejected on the basis that his complaint was filed too late, even though the state Board of Elections didn’t publicize the language until it was too late to file a legal challenge.

Proponents of the measure say the language is appropriate because it represents the goals of the proposition.

Also impacting the proposition’s chances of passing is its placement on the back of the ballot, where voters aren’t guaranteed to look. This means voters who care passionately about the issue will be more likely to vote on it. That could benefit the anti-casino faction, as polling shows this group is larger than those passionately in support of it.

 

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