Expansion of gambling in NY

Today’s Times Union carried an item about Mayor Jennings requesting VLTs for Albany and other upstate cities.  This comes on the heels of Gov. Cuomo’s appointment of a commission to study the possible expansion of casino gambling in the state.  Gambling is alluring to politicians because it’s a way of raising revenue without raising taxes, but will expanded gambling really provide meaningful revenue to the state and its localities?

Let’s go back to the 1970s, when Las Vegas had a virtual monopoly on casino gambling in the US.  New Jersey allowed the opening of competing casinos in Atlantic City, and, for a while, they appeared to be doing well – at least in terms of providing employment to area residents and revenue to the state.  Now, however, the area is not doing so well, primarily due to competition in neighboring states, especially Pennsylvania.  Even when things were going better than they are now, critics complained that Atlantic City residents did not get their fair share of the jobs or revenues, especially given the negative social impacts of gambling on their community.  Closer to home, Howie the Horse Samuels touted OTB as a solution to New York City’s problems.  For a while, perhaps, OTB made a positive financial contribution, but neighbors hated its parlors and it eventually went out of business, unable to turn a profit as the “world’s largest bookie.”  The rise of these two entities came during a time when they enjoyed a virtual monopoly in their markets; their decline came at a time when competition for a first constant, and later declining, amount of gambling dollars proliferated.

So what can gambling establishments in New York offer potential customers that their competition cannot?  To my mind, the only thing, at least under present law, is location.  As real estate investors know, location is an extremely important economic force for any business.  In New York, there are, I would guess, many thousands of residents who gamble outside the state.  Repatriation of their gambling dollars could have a substantial impact.

However, as the lobbyists for existing VLT properties realize, to attract significant numbers of casino patrons, New York has to offer real casino gaming – that means table games and real slot and video poker machines (other posts on this blog explain why the video poker offered at VLT facilities is far worse than the real thing, though its differences are not clearly disclosed).  Pennsylvania has transitioned from VLTs to full commercial gaming, and it has been successful – primarily at the expense of Atlantic City.   For New York to even lure its own residents from facilities in Connecticut, New Jersey, Pennsylvania and, in a few years, Massachusetts, it will have to offer something at least as good as facilities in neighboring states, and maybe, since many patrons of out of state facilities have developed loyalty to those facilities, something better.

Offering something better will require a complete overhaul of the constitutional and statutory provisions regulating gambling in New York, as well as an overhaul of the regulatory structure.  The regulations governing casino gambling in New York at present were designed for firehouse Las Vegas nights, and the agency that enforces those regulations is primarily concerned with horse racing.  VLTs are “regulated” by the Lottery, which partners with the racino operators, creating at the very least an appearance of a conflict of interest.  Fortunately, the head of the commission studying these issues in New York is knowledgeable and appears not to be afraid to stand up to industry influence.

If casino gambling is to proliferate in New York, the state also owes its citizens a duty to educate them on the hazards of gambling.  There are good materials out there – I was pleasantly surprised to see how forthright a guide from the American Gaming Association that I picked up in a Las Vegas casino was – and there should be time devoted in school to the economics of gambling, as well as to personal finance in general.  Our students are taught insufficiently about saving, the cost of credit, the cost of gambling, etc.

For me, a blackjack and video poker player, a local VLT parlor will have no allure.  However, a casino with real 9/6 Jacks or Better and a good blackjack game where the dealer stands on soft 17 and doubles after splitting are allowed will definitely keep my gambling dollars in the Albany area, if not in my bank account.

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