The Divide: Casinos fail to ante up promised revenues

The Divide: Casinos fail to ante up promised revenues

Five years ago, New York voters approved a constitutional amendment to expand casino gambling in the state. The law allowed for up to seven full-scale casinos to be established. Elected officials turned the casino approval vote into proof that they were working on ways to improve the upstate economy. They used the establishment of casinos as an easy out for solving the tough problem of developing long-term solutions to help distressed communities. They touted casinos as the tool to help upstate New York. But, casinos have not met their revenue goals, and the divide between the promised casino revenue and the actual bottom line is politically embarrassing. And, even the soon-to-be-allowed sports betting, will not close the divide.

I was not a supporter of the constitutional amendment to allow casino gambling in New York. I was not opposed on moral grounds or religious convictions, but on idealistic grounds.  I was a “nay” because I thought all the pie-in-the-sky promises made by our elected representatives were unattainable and that these same electeds were doing us a disservice by selling the voters a bill-of-goods that they knew was a total misrepresentation of reality. I wanted to send a message that deceiving voters was wrong and not acceptable.

However, those of us who were opposed to the amendment, no matter the reason, were unable to match the influence wielded by the big money pro-casino advocates.  These pro-casino groups were financed mostly by casino operators, labor unions, and racetrack slot machine operators. The money raised was used to influence Governor Cuomo and state legislators to pass the constitutional amendment and place it on the November, 2013 ballot. Millions of dollars in campaign contributions were made to the governor and state legislators. And, as we all know too well, money talks very loudly in the halls of the State Capitol.

The history of governments relying on gambling dollars to balance budgets, ease tax burdens, and turn economically distressed cities and towns into booming economic regions is a long one. The reasons given decades ago for allowing lotteries, off-track betting, racinos, casinos, and now sports betting have always been the same: property tax relief; economic development; people have been gambling since time immemorial, whether it was legal or not, so let’s make it legal; and we are missing out to neighboring states that offer these gambling opportunities and we need to get a piece-of-the-gambling-revenue pie.   

Well, the reality of casino gambling has not met the promises made in 2013. Not one of the first three casinos that opened, Tioga Downs, del Lago Resort and Casino, and Rivers Casino & Resort have hit its revenue projections. The fourth, and most recent casino that opened to great fanfare, Resorts World Catskills (RWC), has not come within shouting distance of its projected revenue goals. RWC, though it was only the fourth casino to open, could possibly be the last one. The reason the other three allowed casinos may not be built is the reality of the numbers. For example, figures released at the end of July show RWC earned $111 per slot machine per day and $1,192 per table game per day. The parent company of RWC, Empire Resorts, had set goals of $200 per day per slot machine and $1,500 per table game. The Daily Gazette reported that gaming experts have questioned the viability of RWC if it earns less than the $200 daily slot machine number and at least $1,200 daily per table game.  In fact, in its Security and Exchange Commission filing, Empire Resorts stated, “We cannot be certain that our business will generate sufficient cash flow from operations, that our anticipated earnings from the casino will be realized…”

Missed revenue projections is not the only problem facing casinos. The percent of revenue paid to the state by casinos is causing agita, too.  Both Rivers and del Lago have asked the state for financial help. Rivers requested that 10 percent of the money the casino pays to the state, instead be used for marketing proposes. Rivers also asked to be relieved of paying the cost of employee background checks and to end payments it makes to help supplement Saratoga’s harness horse racing purses. Cuomo told the gaming industry that there would be no “bailing out private concerns.”

Not all the news is bad, however. The four casinos employ thousands of people and bring in people to the immediate area who might otherwise never visit the host city or town. And, while the promised tax relief to the local tax payers has not met projections, local governments have received a few million more in tax dollars than they did before the casinos opened.

The problem with the numbers generated by the casinos is almost certainly related to the overly hyped benefits we were told casinos would bring to New York’s struggling communities. If the gaming industry and the politicians had been honest with the residents of the state, and told us the truth about the economic impact casinos would have on the local economy, then the numbers we are seeing would not have been so out of whack with the projected goals. By using terms like “transformative,” “a game changer for upstate New York,” and “it’s a major economic development vehicle for the Hudson Valley region” the governor and state legislators set themselves up for having to explain to their constituents why headlines such as: “New York’s Bet on New Casinos Has Yet to Hit Jackpot” and “NY Casinos Ask for Bailout” are more the rule than the exception.

New York’s elected officials, in trying to show the voters that they were taking the lagging upstate economy seriously, took the easy way out and sold the people on the idea that economically distressed regions of the state could be saved on the backs of gamblers. These same officials ignored the reality that casinos were proliferating all over the northeast, that only a certain number of people gamble, and that people only have a limited amount of funds to expend on gambling activities. They also failed to realize that “build it and they will come” is no longer the norm in today’s gambling culture. Stand-alone casinos’ biggest competition is not from other casinos, but from internet/mobile gambling. On-line poker and sports betting is no longer the future, it’s the present. And, as usual, New York’s politicians were years late in allowing casinos and they may have already missed the boat for on-line gambling.   

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