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Foss: Report urges caution on sports gambling

Foss: Report urges caution on sports gambling

The report outlines four guidelines the state should consider before legalizing sports gambling
Foss: Report urges caution on sports gambling
People place bets on sports at the MGM Grand Race & Sports Book in Las Vegas in 2017.
Photographer: New York Times

One of the more surprising developments of this year's legislative session was the quiet death of the push to legalize sports gambling in New York. 

Given the state's seeming addiction to gambling revenue, I was certain one of these bills would pass. 

But it didn't happen, and while I'm fairly confident the state Legislature will legalize sports gambling at some point, possibly in 2019, the failure to do so this year makes me think it's not the slam dunk it initially appeared to be. 

It also makes me think there's a chance lawmakers have learned some lessons from the state's foray into casino gambling upstate. 

The big lesson: It's easy to overstate the benefits of expanding gaming. 

Efforts to open up new gambling opportunities to state residents should be approached with skepticism, rather than stars in one's eyes. Lawmakers approached legalizing casino gambling upstate with stars in their eyes, and misled voters in the process.

In a new report, titled "Hold Your Bets," the Citizens Budget Commission, a non-profit organization based in New York City, says the state should exercise caution when it comes to sports gambling, in part because of the wildly inflated revenue projections that portrayed casino gambling as an unmitigated boon for taxpayers.

The report outlines four guidelines the state should consider before legalizing sports gambling. They are sensible and well thought out, and should inform lawmakers' efforts to navigate a complex and controversial process. 

The first guideline: Revenue estimates should be conservative. 

"Since sports betting has been illegal, it is difficult to predict how much of the illicit activity will transition to the legal market and how many new participants will engage," the report states, noting that "previous estimates on other types of gambling revenues in New York have been overly optimistic." 

Which is an understatement, to say the least. 

The second guideline: Taxes should be designed thoughtfully in a competitive marketplace. 

"Many states, including several in close proximity to New York State, are entering the sports betting arena," the report states. "Initial tax rates on [gross gaming revenue] vary widely, and the economic impacts are uncertain." 

Which means we should be wary of anyone who portrays sports gambling revenue as a can't-miss proposition. After all, we've heard that before. 

The third guideline: Sports betting's potential impact on other gambling revenues should be considered. 

"In addition to falling short of revenue expectations, the recently opened commercial casinos in upstate New York have also taken a large share of revenue from competitors including racinos at Finger Lakes Gaming, Vernon Downs and Saratoga Springs that feature slots and electronic table gambles," the report states.  

In July, The Daily Gazette reported that patrons gambled 14.5 percent less money at Saratoga Casino Hotel during the first six months of 2018 than in the same period in 2017. 

Which means we should be asking hard questions about whether the state's casino market is oversaturated (SPOILER ALERT: It is) and whether sports gambling might hurt, rather than help, existing businesses. 

The fourth guideline: Legislation should take into account that gambling taxes are regressive, and increased prevalence of gambling will impose social costs. 

"Expanding the opportunities for gambling in New York is likely to increase the prevalence of 'problem' gambling, which has been shown to be at its highest level in disadvantaged neighborhoods and is associated with a range of behaviors, including crime, abuse, job loss and bankruptcy, that impose social costs on others." 

Which is something we already know, based on what's already happening in the Capital Region. 

As I've written before, the Center for Problem Gambling in Albany has seen a steady increase in clients since Rivers Casino in Schenectady opened -- an increase that shows no signs of abating. Before the state legalizes another form of gambling, it needs to assess how doing so will impact communities and families throughout the state. 

Despite its somewhat negative tone, the CBC report doesn't come out in opposition to sports gambling. 

The organization recognizes that sports gambling represents an economic opportunity for the state. But it also recognizes that it's an opportunity that comes with unintended consequences and harmful social impacts.

Which isn't exactly revelatory, if you've been following the ups and downs of the upstate casinos. 

We can't undo mistakes that have already been made, but we can make an effort to prevent similar mistakes from being made in the future. 

How lawmakers approach sports gambling will reveal a lot -- and tell us whether lawmakers are capable of learning from past mistakes. 

Reach Sara Foss at [email protected]. Opinions expressed here are her own and not necessarily the newspaper's.   

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