In our region, casino gambling has been promoted as a shot in the arm to the slumping local economy and a driver for tourism. The luxury resorts of the Borscht Belt in Sullivan County, which drew vast summer crowds in the area’s midcentury heyday, have mostly succumbed to neglect and decay. Advocates have long hoped that a Vegas-style casino would restore some of the region’s luster.
In February, Empire Resorts opened Resorts World Catskills, a $1.2 billion casino and resort complex in Monticello. The resort opened to great fanfare from local officials: State Senator John Bonacic, then the chairman of the Senate Committee on Racing, Wagering, and Gaming and a tireless champion of the resort, said that the casino would deliver “untold opportunities” for the region. But since its grand opening, Resorts World has struggled to deliver on its developers’ promises. In its first five months of business, the resort lost $58 million.
Resorts World’s financial struggles are particularly troubling, one gambling researcher told the New York Post in August, because as the closest to New York City, it was the marquee property among New York’s four new upstate casinos, all authorized in 2013 by a state ballot referendum.
“The numbers at the Catskills casino are pretty ominous,” said University of Texas-Rio Grande Valley professor Clyde Barrow, who published a study warning that those projections were inflated.
“It’s doubly troubling because when a casino first opens you get the curiosity effect, with a rush of people showing up. You did not get that with the Catskills facility.”
Another upstate casino, the del Lago Resort and Casino in the Finger Lakes town of Tyre, is faring even worse. After falling $100 million behind projections, the casino petitioned state officials unsuccessfully for a taxpayer-funded bailout earlier this year.
In other places, casinos have been a bust: Casinos built in Ohio since a 2009 referendum haven’t delivered on promised benefits, the Dayton Daily News reported recently.
Casinos: A Good Bet for Economic Development?
Local governments often see casinos as an alluring prospect, because they tend to deliver tax revenue to struggling municipalities and school districts. But are casinos good for local economies? It’s a surprisingly tricky question to answer.
When calculating the impact of a project on the community, developers and planners like to talk about the “multiplier effect”—in other words, the effect each dollar spent on the project will have on the larger local economy. That effect can be either positive or negative, depending on whether the project injects new spending into the local community or drains it away.
A casino has both positive and negative impacts on the community at large. On the positive side of the ledger, you have things like construction and job creation, drawing investment dollars into the local economy. On the other side, things like increased crime related to problem gambling or a decrease in local property values can drag the multiplier effect into negative territory. If local spenders simply substitute casino gambling for local spending they were going to do anyway, the net impact is zero.
Calculating all of the various impacts a casino has on its surrounding region is fiendishly difficult, but some research suggests that casinos act as a net drag on local economies. The Atlantic’s David Frum digs into the evidence, in a 2014 article provocatively titled “A Good Way To Wreck a Local Economy: Build Casinos”:
Local governments often see casinos as an alluring prospect, because they tend to deliver tax revenue to struggling municipalities and school districts. But are casinos good for local economies? It’s a surprisingly tricky question to answer.
When calculating the impact of a project on the community, developers and planners like to talk about the “multiplier effect”—in other words, the effect each dollar spent on the project will have on the larger local economy. That effect can be either positive or negative, depending on whether the project injects new spending into the local community or drains it away.
A casino has both positive and negative impacts on the community at large. On the positive side of the ledger, you have things like construction and job creation, drawing investment dollars into the local economy. On the other side, things like increased crime related to problem gambling or a decrease in local property values can drag the multiplier effect into negative territory. If local spenders simply substitute casino gambling for local spending they were going to do anyway, the net impact is zero.
Calculating all of the various impacts a casino has on its surrounding region is fiendishly difficult, but some research suggests that casinos act as a net drag on local economies. The Atlantic’s David Frum digs into the evidence, in a 2014 article provocatively titled “A Good Way To Wreck a Local Economy: Build Casinos”:
The impact of casinos on neighboring property values is “unambiguously negative,” according to the economists at the National Association of Realtors. Casinos don’t encourage non-gaming businesses to open nearby, because the people who most often visit casinos do not wander out to visit other shops and businesses. A casino is not like a movie theater or a sports stadium, offering a time-limited amusement. It is designed to be an all-absorbing environment that does not release its customers until they have exhausted their money.
The Institute for American Values has gathered the best evidence on the social consequences of casinos. That evidence should worry any responsible city government.
People who live close to a casino are twice as likely to become problem gamblers as people who live more than 10 miles away. As casinos have become more prevalent, so has problem gambling: in some states, the evidence suggests a tripling or even quadrupling of the number of problem gamblers.
Not all the evidence is so gloomy. In a recent study of gambling in Massachusetts, UMass Amherst researchers concluded that a casino in Plainville had had no significant negative impact on crime, problem gambling, or property values, and that casinos had been a net benefit to local towns:
“There has been a pretty significant impact in unrestricted local aid to towns and cities,” said Rachel Volberg, associate professor at UMass Amherst and the study’s lead author. Plainridge Park alone has accounted for close to $200 million dollars in aid to all Massachusetts cities and towns over the last three fiscal years, according to the state.
Another issue in gambling research: Independence. In a 2014 article in The Conversation, Rebecca Cassidy and Charles Livingstone argued that researchers’ ties to industry make it difficult to trust their results:
We cannot trust gambling research. We must therefore be sceptics. Every expert invited to give evidence to a committee on gambling should be asked, “Have you ever accepted money from the industry to conduct a piece of research, write a paper, or attend a conference?”
In the absence of a culture of disclosing interests, every paper submitted as evidence should be contextualised–again we must ask “Who paid for this research?” and “How did this person gain access to data?”
What Next for Local Casino Gambling?
Looking ahead, the backers of Resorts World Catskills are investing in an even bigger gamble than slots and cards: Sports betting.
Wagering on sports is not legal in New York State, at the moment. But in the wake of a Supreme Court case this May that struck down a long-held federal statute, opening the door to legal gambling on sports outside of Nevada, casino operators in New York believe that sports betting could be a “lifeline” for upstate casinos.
In November, Empire Resorts entered into a $34 million deal with UK-based gambling company bet365, giving the British firm 4.9 percent ownership in the company and inking a 20-year deal for the two companies to split revenue from sports betting at Resorts World if New York State legalizes the practice. The deal gave a sharp boost to Empire Resorts stock in November, after a year of steep declines.
Investors may have high hopes for sports betting, but $34 million is a lot of money to wager on a practice that isn’t yet legal. State legislators are already at work on legislation, which could come as early as 2019, but there are still unresolved questions about the constitutionality of sports gambling in the state.
Empire Resorts has already infused millions of dollars’ worth of construction spending into the local economy, and helped to contribute to a surge in regional employment. Time will tell whether the casino will pay off for the Hudson Valley and Catskills region in the long term. The numbers have been disappointing so far, and Atlantic City’s bleak boardwalk is a cautionary tale. But for a glimmer of optimism, we can look toward Indiana, where a pair of casinos built twenty years ago in Gary and Hammond are still helping to anchor the local economy.
