City and state will pay high price for casino
Moody’s downgraded its outlook on the entire U.S. gaming industry (outside Nevada), moving it from “stable” to “negative” due to recent declines in monthly gaming revenues.
The commercial casino industry realized $37.83 billion in revenues in 2013, only a modest increase (1.3 percent) over 2012. The lion’s share of this disappointing increase came largely from gaming’s expansion into new markets — gaming needs new casinos for profits to grow. Gaming’s weird business model includes each new casino’s gains being at the expense of others’ profits.
New York and Massachusetts are especially fertile territory for commercial gambling because, unlike Pennsylvania, they are not yet oversaturated with gambling establishments.
The Daily Gazette is “betting on [a casino’s] being a welcome addition to Schenectady, [even if] the rosiest economic projections for the casino don’t ... come to full fruition [June 10 Gazette].”
Schenectady’s City Council will compromise by throwing in with Rush Street Gaming, a Chicago corporation. Rush Street’s Philadelphia and Pittsburgh casinos “have been fined a dozen times ... for violations [including] ... failing to prevent a 15-year-old boy from gambling. Rivers Casino and Rush Street Gaming’s Sugar House Casino in Pennsylvania was fined “several times for allowing people with gambling problems ... to enter and gamble at the casinos.”
Such fines, just for the above infractions at Rush Street’s two Pennsylvania casinos, represented about 20 percent of the $1.7 million in total fines issued to casinos by Pennsylvania’s gambling regulators.
Why would New York state issue a gambling permit to Rush Street Gaming or any other casino parent company that violates interstate laws? The Cuomo administration is unlikely to look very carefully at Rush Street’s “rap-sheet”: Common Cause New York documents that since 2005 in New York state, gambling and horse racing interests have spent more than $59 million on lobbying and political contributions.
Gov. Cuomo, who recognizes “the potentially corrosive influence of [taking] money from gambling interests,” just the same has received more campaign donations from them — over $1 million — than any other elected New York state official or candidate.
History has not favored cities dependent on gambling revenues — from California’s Bell Gardens in 1990 (when the feds seized its Bicycle Casino for alleged drug money laundering), right up to Missouri’s and Ohio’s casino cities today — have felt the sting of wagering on casino gambling to cover budgetary challenges.
Competition between casinos, national economic downturns, and even harsh winters, have cut U.S. casino revenues. In Missouri during the first seven months of 2014, casino patronage decreased about 9 percent from the previous year: a cold winter kept gamblers home, continuing U.S. economic problems impacted disposable income, and Missouri, with 13 casinos, suffered competition from its own cities’ and neighboring states’ gambling establishments.
Seven of Missouri’s nursing homes that depend on casino revenues — serving 1,350 retired military service veterans — are facing staff cuts; some may be closed altogether. The state’s public schools will suffer deep funding cuts.
Will casino gambling create 1,200 “new jobs” for Schenectady? Actually it will create a need for many more new jobs: taxpayers will foot the bill for additional street police. A 2004 study of U.S. counties with and without casino gambling found an 8 percent increase in crime in counties with casinos compared to those without.
Taxpayers will pay for more undercover and other vice detectives to monitor such casino-associated entertainment as escort services, prostitution and (God forbid) the interstate transport of underage sex workers. The city will need to ramp up hospital and HIV/AIDS prevention and treatment services: Drugs and prostitution, “always birds of a feather,” fueled Atlantic City’s 2004 HIV epidemic, with one in 40 residents infected.
Many infected are prostitutes whose sex work earns money for drugs. Gamblers and their families will pay a very high price for Schenectady’s regressive economic development model, even though U.S. gaming customers will “continue to limit their spending to items more essential than gaming,” as Moody’s vice president declared recently.
As for the region’s existing entertainment providers, Proctors among them, good for them for joining to question how new casinos will impact existing non-gambling entertainment. Unfortunately, our region’s entertainment coalition is the “David” of casino gambling’s “Goliath.” Going forward, casino gambling needs younger players to grow profits; its current aging demographic cannot be wagered to stimulate future revenue increases.
Getting younger clients, as Las Vegas learned long ago, requires building contiguous in-house “big-star” entertainment venues — Proctors down the road will have to compete.
Gaming’s bet is that younger clients will catch gambling fever and alter the existing demographic — much to the detriment of their own and our city’s future. Wagering on “fools’ gold” several up-state New York rust-belt cities seem to be declaring “who cares about the long-lasting negative impacts of casino gambling as long as our city gets its casino.”
That’s the gambler spirit: I wager/you wager, I win/you lose.
Taking a gambler’s approach to urban development, Schenectady’s city managers hope that casino revenues will keep property taxes from raising, provide a financial boost to its income-stratified schools, foster unspecified “urban development,” create new jobs, and not negatively impact local businesses. Such naive thinking has city leaders drawing to an inside straight — anticipating something that has little chance of happening.
Gambling — an “extractive industry” — sucks the income and life out of gamblers, their families, and cities. I hope the state’s ABC [Alcoholic Beverage Control] will deny the hungry, recidivist, casino prospectors a retail liquor license.
Martha K. Huggins
The writer is emerita professor of Union College and Tulane University.