Sure, let’s have state auditors investigate why the three new upstate casinos have thus far failed to meet revenue projections.
That’s what state Assemblyman Gary Pretlow, who chairs the Assembly’s Racing Committee, is asking Comptroller Thomas DiNapoli to do, according to an article from the USA Today Network’s Albany bureau.
It’s a good idea, in part because it should have been obvious from day one that these casinos were never going to meet the rosy projections made back in 2014.
You didn’t have to be an expert on casinos or an industry insider to figure this out.
I figured it out sitting at my desk and reading about the oversaturated Northeastern casino market.
Of course, there’s no going back in time and fixing the bids that overstated the first year of revenue for the three upstate casinos that have already opened by approximately $220 million.
But it would still be nice to have an analysis of casino performance that takes a good, hard look at what we can expect going forward, which is what Pretlow is calling for.
The revenue projections from three years ago have proven to be pretty much useless — wildly off-base, to put it mildly.
Schenectady taxpayers were once told they might see a property tax cut as high as 10 percent, but that seems unlikely to ever materialize, although it’s worth noting that property taxes in the city have decreased by 6.3 percent over the past several years.
Which is something … but imagine what it would be if Schenectady’s Rivers Casino & Resort was anywhere close to meeting those initial projections.
Rivers, you might recall, project that it would bring in between $181.5 million and $222.2 million during its first year, but had grossed just $81.8 million as of late September, “a pace that represents just 77 percent of even its lowball estimate,” according to the New York Times.
The Del Lago Resort & Casino, near Rochester, projected that it would bring in $262 million during its first year of operation; as of late September, it was on pace to gross about $151 million.
Local officials have urged people to be patient with the Schenectady casino, and maintained that development at Mohawk Harbor will boost revenues down the line. Office space and apartments will gradually fill up, and eateries such as Druthers Brewery will soon open, bringing more people on to the site.
I expect that Rivers will see an uptick in revenue from this activity … but not enough to meet its original projections.
It might seem harsh to harp upon the inaccurate predictions made during the state’s competitive bid process.
After all, the casinos are making money, and generating millions in new revenue. It might not be as much revenue as we were told to expect, but it will still give cash-strapped local communities a shot in the budgetary arm. When you look at this bigger picture, does casino under-performance really matter?
I would argue that it does matter — that it’s worth understanding why those projections were inflated and what the failure to hit those targets might mean long-term.
Nobody help a gunpoint to anybody’s head and forced them to put inflated numbers in their bids, and there was plenty of commentary and analysis warning that casinos weren’t all state officials were cracking them up to be.
Casino backers mostly ignored this more pessimistic outlook, preferring to stick to their preferred narrative about how casinos would save upstate New York. Whether they simply didn’t believe the forecasts suggesting the new casinos wouldn’t fulfill their promises, or chose to ignore them, we’ll probably never know.
What we do know is that the pessimistic outlook was the correct one — and is the correct one going forward, too.
New York is now in the casino business, and we need the state to be realistic about what this means.
A review of the new casinos’ performance will provide valuable insight that will help inform and guide gaming policy in the future.
Reach Gazette columnist Sara Foss at [email protected]. Opinions expressed here are her own and not necessarily the newspaper’s. Her blog is at https://dailygazette.com/blogs/thinking-it-through.