SCHENECTADY — It’s an issue of fairness or an outrageous demand for a subsidy, depending on who's speaking.
The news last week that two almost-new casinos are already seeking financial help from the state sparked fresh criticism of legalized gambling and a renewed defense of casinos as a source of economic vitality.
Rivers Casino & Resort in Schenectady wants to take 10 percent of the tax it pays to the state and spend it instead on marketing. It also wants to stop subsidizing horse racing purses at the nearby Saratoga Casino & Hotel, which has suffered a 20 percent decline in business since Rivers opened 20 miles away.
Meanwhile, in the Finger Lakes region, Del Lago Resort and Casino is seeking help because of what it considers new and unfair competition from Indian-run casinos nearby.
These two casinos, along with Tioga Downs in the Southern Tier, have all missed their first-year revenue projections. The fourth non-Indian casino in the state, Resorts World Catskills, is so new that its performance can’t be judged.
As of Friday, negotiations for the 2018-19 state budget were underway. But Assemblyman Phil Steck, D-Colonie, whose district includes Rivers Casino and who supports the changes Rivers seeks as a matter of fairness, said there apparently would be no help extended as part of the budget.
No less a figure than Gov. Andrew Cuomo threw cold water on the request, saying he didn’t want to “bail out” casinos. He had been a major backer of limited legalized casino gambling as a means of recapturing money New Yorkers were spending at casinos in other states. And he has heralded the opening of each casino, in turn.
Rivers is in the district of Sen. Jim Tedisco, R-Glenville, who indicated his appreciation for the casino in a prepared statement but said a more plausible approach would be for the casino to seek marketing assistance rather than tax breaks.
Another Republican, Assemblywoman Mary Beth Walsh, of Ballston, said she doesn't see justification for a tax break, as Rivers appears to be doing well. Even if it were not, she said, the casino was aware of the competitive market when it agreed to the terms of doing business in the state; the nature of private industry is that it must succeed on its own.
In nearly 14 months of operation, Rivers has grown to employ nearly 1,200 who are paid substantially more than the industry average. Hundreds of thousands of guests have gambled more than $1.3 billion on its gaming floors, and Rivers has paid the state, city and surrounding municipalities a $50 million one-time fee and more than $50 million more in the form of ongoing monthly, quarterly and annual taxes.
Eighty percent of those taxes go to the state and are earmarked for education aid above and beyond that which the state Legislature budgets. The rest stays in the Schenectady region.
“It has made a positive impact in Schenectady,” Steck said, adding that the help Rivers is seeking would boost its revenue, allowing it to make an even bigger positive impact.
How that help could come remains to be seen.
“I don’t see any issues regarding casinos being done in this year’s budget,” Steck said, adding that he thinks there is a growing consensus that the issue of how all four new casinos are taxed needs to be re-opened.
The problem, he said, is that there is no equality among them.
- Each casino’s table game tax rate is the same: 10 percent. But slot machine proceeds, by far the largest revenue stream, are taxed at a different rate for each. Rivers is the highest by a wide margin.
- Some of the casinos’ competitors in the racino world get a marketing allowance.
- And Rivers is the only one of the four recently opened operations that didn’t get substantial breaks on sales, mortgage or property taxes as an incentive for construction.
“All these negotiations were individualized, so they were somewhat chaotic,” Steck said. “There’s no clear pattern.”
Meanwhile, just over the horizon, legalized sports gambling could radically alter accounting and marketing within the state's young casino industry.
The U.S. Supreme Court in December heard arguments in a New Jersey case. Its ruling this spring could settle, once and for all, whether states can legalize sports betting, which now involves hundreds of billions of dollars in activity each year, most of it illegal.
In anticipation, legislation has been introduced in New York to legalize sports gambling, and Steck said the casinos already are arguing they should get to offer it in-house.
He is not a fan of legalized sports gambling any more than he was of legalizing casinos. But if it happens, he’ll try to make it benefit Rivers, just as he wants to benefit Rivers by reducing its required payments.
“Now that it’s here, we have to make it successful,” Steck said.
Rivers Casino & Resort has consistently refused to discuss its performance and operations, generally speaking only through a public relations agency and usually only to announce its achievements or promote upcoming events.
The casino refused two requests to comment for this story, as did the Galesi Group, which built Mohawk Harbor, the retail-hotel-residential-resort development of which Rivers is a part.
Here is a look at some of the ways Rivers has impacted the community in its first year.
Rivers Casino & Resort, in its license application with the state, said it would create 877 full-time and 193 part-time jobs, or a total of 1,070.
This was one of the key selling points for the casino in the city, and it apparently has exceeded that promise.
Management has provided limited public information about the casino’s operation in its first year. At its first anniversary in February, for example, it said it had “more than 1,100 team members” drawing a collective annual salary of “more than $43 million.”
Rivers didn’t provide an average salary, but $43 million split among 1,100 people would average out to about $39,000 a year per person.
This is excellent or just OK, depending on how it is compared:
- The quarter-million Americans holding all job titles in the gambling industry earned an average $30,640 in May 2016, according to U.S. Bureau of Labor Statistics estimates.
- The 443,000 workers holding all job titles in the Albany-Schenectady-Troy metropolitan area averaged $52,340 in May 2016, the bureau estimated.
- By U.S. Census Bureau estimates, the 2016 median household income in the city of Schenectady was $41,243. Median household income is a very different statistic than average individual salary, but it gives some perspective on the city that hosts Rivers.
On Thursday, the state Gaming Commission said there were 1,184 licensed employees actively working at Rivers. The Gaming Commission also noted there had been 1,880 licenses issued for employees at Rivers over its short lifespan, meaning 696 people are inactive or former employees.
That equates to a turnover rate of nearly 59 percent in 14 months, which isn’t as high as it might sound: Bureau of Labor Statistics data show the number of separations of all types (quit, fired or laid off) in 2017 equaled 43 percent of the workforce for all professions, and 74 percent for the leisure/hospitality industry.
Again, the casino isn’t commenting on the quantity or quality of the jobs it has created, or on critical details, such as the amount of tips its employees collect or whether its turnover rate has settled down after an early period of growing pains.
But on Wednesday, it was listing 56 job openings on its website — for everything from sous chef to IT systems and app administrator.
The fact that Rivers has been able to hire nearly 2,000 people suggests it offers an attractive package, given the tight labor market in the region.
Tom Schin, client relations executive at AccuStaff, an Albany-based staffing agency with offices in Johnstown and Malta, said there was a shortage of workers even before Rivers started hiring. It was particularly hard to find people for jobs paying between minimum wage and about $30,000 to $35,000 a year, he said.
The casino hasn’t made AccuStaff’s work harder, he said, mainly because it doesn’t staff or recruit in the hospitality industry.
“I don't know that we have experienced a big pinch with Rivers coming in,” Schin said.
Regardless, he does have to look high and low to meet his clients’ needs. Old-fashioned word of mouth — even if the words are pecked out as a text or social media post — still seems to work best.
“Referrals are huge,” Schin said. “Treat people the right way; they’re going to refer their friends to you."
Sean Maguire, director of economic development for the Capital District Regional Planning Commission, said the hospitality industry in Schenectady County began growing long before Rivers opened. The sector added 57 establishments and 1,600 employees to end up with 345 businesses and 4,733 workers by the third quarter of 2016, the latest period for which final data is available. Preliminary data for the third quarter of 2017 show a total of 5,676 people working in hospitality countywide.
“There’s certainly a bump going on there,” Maguire said. “We could attribute a lot of that directly and indirectly to the casino.”
He added: More people who haven’t participated in the workforce are participating again. Things are running well.”
When expansion of casino gambling beyond the borders of Native American territory was proposed in New York state, a number of performing arts centers and venues worried that Las Vegas-style casino entertainment could cut into their business.
Eleven of these theaters formed The Upstate Theater Coalition for a Fairgame. It sought and won provisions that included limits on size and capacity of entertainment venues at casinos, a ban on exclusivity agreements with performers, and creation of an annual $1.3 million payment to the coalition.
Proctors in downtown Schenectady led the coalition, said CEO Philip Morris, and the theater remains actively involved with the nearby Rivers Casino & Resort.
Morris said the 11 coalition members now interact mainly with their nearest casinos, and the first year has gone very well.
“Fairgame and [Rivers] casino have a terrific relationship,” he said. Del Lago and Tioga Downs are interacting well with their theaters, he added, and there’s no indication that newly opened Resorts World will be any different.
Above and beyond that, Proctors and Rivers have formed an administrative and promotional partnership, Morris said.
“The Rivers folks have wanted to work with us, which was allowable under the coalition guidelines,” he said. “We have been doing all of their booking of local performers … as well as larger-name performers in banquet halls. That’s been a great relationship.”
Morris said local acts perform at Rivers three or four nights a week, gaining exposure over the past year (and paychecks totaling nearly $750,000).
“I think that local musicians are pretty ecstatic," he said.
Proctors also handles ticketing for Rivers and coordinates calendars to avoid competition with nearby venues, a service for which Rivers pays Proctors enough to partly cover the salary of a new booking and programming staffer.
“We’re not in a profit-making mode with the casino,” Morris said. “We’re not in a money-losing mode, either.”
Morris said he doesn’t have a feel for whether there has been much spillover of casino patrons to Proctors or to downtown in general. The effect has been more of a transformational one for the city as a whole, rather than for any single business entity, he said.
“What happened at Mohawk Harbor is to our [community’s] reputation in 2018 what the Proctors rebuild was to our community’s reputation in 2005 -- that ‘Really?’ moment.”
In 2012, Schenectady County Community College officials began considering creation of a casino management program, in recognition of the region's already having a racino — a harness racing track with electronic gaming casino attached — and in anticipation of the area possibly getting a full casino.
In 2013, with cooperation from the Saratoga Springs racino, SCCC launched a two-year, 60-credit program leading to an associate degree in casino and gaming hospitality.
This is one of the things community colleges do well: respond to developments within their regions to adjust offerings and provide students a career path with local opportunities in relatively short order, often in partnership with local industries.
At the start of the fall 2016 semester, Rivers Casino was being constructed a mile from SCCC, and interest had surged in the new casino degree — 49 students were enrolled.
However, by fall 2017, only 17 were enrolled.
How many are enrolled now is unclear: SCCC would not say.
It issued this statement Friday:
“All programs at the College routinely undergo a rigorous curriculum review process that examines the programs, enrollment and employment demand. The college has recognized a decline in enrollment in the Casino and Gaming Hospitality A.A.S. degree program and, with this being the case, is thoroughly reviewing the program in concert with industry experts.”
The program remains listed on SCCC’s website as a curriculum offering, with the following summary:
“The Casino and Gaming Hospitality A.A.S. degree program responds to the need for qualified professionals who understand the operation areas of the casino and gaming industry and the strict regulatory requirements.
“The 60-credit program provides students with the requisite knowledge and skills for professional opportunities in the gaming industry. It is designed to offer a well-rounded curriculum and includes six new courses in casino gaming management, as well as support course work in marketing, tourism and human resources management. Each student will be expected to complete an industry-specific internship. The core courses provide students with an overview of casino management, casino operations, regulatory requirement and casino security and surveillance.”
Each of the new casinos has provided significant benefit to its immediate surroundings. In some cases the benefit is less than promised, but on the whole, it is a major net gain.
Here’s what Rivers Casino & Resort has done for Schenectady:
- A $300 million business built on what had been a tax-exempt, blighted factory site;
- A one-time 2016 payment of $2.5 million to the county, $2.5 million to the city, and $5 million split among seven surrounding counties, as their cut of the casino’s $50 million licensing fee;
- More than $1 million to the city and more than $500,000 to the county from the one-time 1.25 percent mortgage tax on the casino and hotel;
- Sales tax paid on all items purchased to build and equip the casino and hotel, also a one-time revenue item;
- More than 1 million worker-hours of temporary construction labor;
- More than 1,100 permanent jobs on site;
- In 2018, $3.52 million in property taxes — $1,844,257 to the school district, $1,132,965 to the city and $545,948 to the county;
- Annual revenue from the 4 percent occupancy tax on hotel stays and 8 percent sales tax on retail sales on site;
- An unquantifiable benefit (or drawback, depending on one’s perspective) as new businesses and residential development spring up near the casino, bringing new visitors, taxpayers and tax dollars to the city;
- A chunk of the roughly 32 percent gambling tax collected by the state, which for the 12 full months it has operated totaled $45.45 million; the state kept 80 percent of this, Schenectady and Schenectady County got 5 percent each, and surrounding counties divided 10 percent based on population.
Casinos are a polarizing subject. Lots of people don’t like them on moral grounds, or because they take money from people who can’t afford to lose it, or because they negatively impact their surroundings. All of those things are subjective.
One concrete number critics can point to is host community benefits. Each of the four new casinos has missed its targets for this by a wide margin.
- Del Lago paid $42.9 million in gaming tax for its first 12 full months but projected paying $59 million to $76 million in its first year.
- Rivers paid $45.5 million but had projected $69 million to $86 million.
- Tioga Downs paid $28.4 million but had projected $31 million to $38 million.
- Resorts World, the largest of the four, had projected $80 million to $93 million. Rating its performance is all but impossible at this point. On a prorated basis it has come nowhere near the target since opening Feb. 8, but it has been cursed with a remarkable stretch of bad weather: Four major snowstorms that all but paralyzed the region, including the crucial New York City market that the casino is counting on for revenue.
In Schenectady, the city got $2.27 million in gaming tax from Rivers in its first 12 months of operation. The city had budgeted for $2.75 million, based on projections. That would suggest a 21 percent shortfall, except it’s not. The city budgeted $2.75 million for 10 months of the 2017 calendar year. It actually got only $2.03 million in 11 months, a 26 percent shortfall.
As a result, the city has budgeted only $2.3 million in gaming tax for calendar 2018. If the past 12 months are any guide, that estimate will be spot-on.
Also as a result, the tax cuts promised to long-suffering city property taxpayers have been smaller than expected.
All this has let critics crow: “I told you so.”
Supporters respond by saying, in effect, “OK, the glass is only seven-eighths full, but that’s seven-eighths more than we had two years ago.”
Information graphics by Kathryn Hume/Gazette Digital News Assistant.