Before long, New Yorkers and the millions of tourists who visit the city every year may have a new way to test their luck – and part of their money – amid the bright lights and the the skyscrapers of Midtown Manhattan: the hand of blackjack or the spin of the roulette wheel inside a new casino with all the trappings of Las Vegas, down to the relentless ringing and fluorescent flashing of a sea slot machine.
This vision is one of many possibilities after state lawmakers in April approved up to three full-service casinos in the New York City area, a potentially seismic development that officials have touted as a way to attract new jobs, tax revenue and visitors .
A new casino in the city could change the national gambling landscape by tapping directly into the country’s largest market, analysts say. Casino resorts built in the heart of major cities are rare.
But whether the city and state will ever realize the promised economic success is far from certain. Evidence from other metropolitan areas shows that projections of tax revenues by casino companies are often overstated and that the economic benefits of casinos decline over time.
The extent to which casinos actually enhance the local economy has been debated for decades by officials. And the full cost to the communities where casinos are built – including the impact on existing businesses, crime and gambling addiction – can be difficult to measure.
“You’re going to see predictions from casino operators that need to be taken as salt,” said Enrique Zuniga, who serves on the Massachusetts Gaming Commission, the state’s casino regulator. , who served on the Massachusetts Gaming Commission, the state’s casino regulator, said when a new Wynn Resorts casino was approved and opened near Boston.
However, Mr. Zuniga said, the potential for some positive impact is real: “Importantly, are the city and the state positioned to benefit?”
The casino industry has long coveted New York City, with an estimated 8.5 million residents and global appeal as a tourist destination. The only casino-like option in the five boroughs is the Resorts World facility at Aqueduct Racecourse in Queens, a “racino” or horse track with slot machines but no table games, like roulette. Last year, Resorts World had the highest gambling revenue of any casino business outside of Nevada.
Perhaps the most obvious comparison to New York’s commitment is the Boston-area resort, Encore Boston Harbor. When it opened in June 2019, it was one of the first Las Vegas-style resort casinos in the heart of a major metropolitan area.
Less than a year later, the coronavirus hit, and Encore, like the rest of the entertainment industry, suffered. Even in the months before the pandemic, the casino – which cost $2.6 billion to develop – fell short of its revenue target.
A Wynn spokeswoman said the resort cannot fully reopen until September 2021 after closing during the pandemic. The casino has paid out about $531 million in taxes and fees to local and state governments to date, he said.
Nationwide, casinos have rebounded sharply after the lifting of Covid-19 restrictions. Gambling revenue jumped to a record high last year, as thrifty visitors flocked to casinos, according to the American Gaming Association.
State Senator Joseph Addabbo Jr., a Democrat in Queens and chairman of the committee that oversees casinos, said “New York” could make billions of dollars in revenue. “Even if you don’t like gambling, you will benefit at some point from this.”
But as New York prepares to embark on a months-long process of deciding where to allow casinos, the disruptions of the past two years have further underscored the difficulty of predicting the outlook for casinos. new.
The benefits of casinos are short-lived, and the only way for states to realize sustainable growth, said Lucy Dadayan, a senior research associate at the Urban Institute, a research organization. Sustainable gambling tax revenue is opening more casinos or legalizing new forms of gambling, like online or sports betting.
“When there is a new casino opening around the corner, people come and try it because of the novelty,” said Ms. Dadayan. “After a while, a year at the very least, it disappears.”
Although most US casinos are located in rural or suburban areas, the number in urban areas has increased in recent years. In May, local legislators in Chicago approve a proposed plan for the city’s first casino, which the mayor, Lori Lightfoot, framed as necessary to avoid a property tax increase. In Philadelphia, a second casino opened last year near the city’s sports stadiums.
At Harrah’s casino in New Orleans, gambling revenue has fallen almost every year since peaking in 2008. The casino reached an agreement with lawmakers in 2019 to renovate the property and continue operating for another 30 years in exchange for more money for the city and state.
A media representative for Caesars Entertainment, which owns Harrah’s, did not respond to a request for comment.
The New York casino debate is likely a supercharged version of wars that have taken place in other parts of the country. Local Manhattan officials have long resisted proposals to add casinos, saying they would divert spending from other small businesses while encouraging disordered gambling.
A 2004 study by University of Buffalo researchers found that people who lived within 10 miles of a casino were twice as likely to have a gambling problem than those who lived further away.
“This is great money for the government, but it’s not money that doesn’t come from,” said Jonathan Krutz, professor emeritus at Boise State University who has studied casinos for three decades. where. “That’s the price to pay for addicted gamblers.”
In a paper published this year studying casinos in 39 states between 2002 and 2017, Professor Krutz found that local economies with casinos did not grow faster in terms of retail sales. compared to economies without casinos. He concluded that casinos often don’t attract new money, but instead cannibalize existing businesses.
For a New York City casino to bring maximum benefit, it should ideally attract a significant number of suburban visitors to its convention center, hotel rooms and restaurants, according to an impact report. last year’s economic from Spectrum Gaming Group was authorized by the state gambling regulator.
Cities around the world have experimented with casino regulations in an attempt to get the most money out of tourists, while minimizing harm to local residents. In Singapore, for example, foreigners can enter casinos for free while locals have to pay.
It will be several months before the New York sites are announced. The state gambling commission has until October to form a committee that will manage the registration process.
Lobbying has already begun, with companies proposing locations from Times Square to Coney Island to the Citi Field parking lot in Queens. At least two of the potential proposals refers to the luxury Monte-Carlo-style casinos on Manhattan’s East Side waterfront or on the top floor of the Fifth Avenue department store.
Top contenders for two of the three licenses are the existing racino in Queens and a similar property in Yonkers, NY, Empire City Casino. With a full casino license, they can expand to offer live table games like poker and blackjack.
Mayor Eric Adams said he wants two out of three casinos in New York City’s five boroughs.
Local officials say a high-end casino would be more palatable because it would not target the poor in New York. Economic research has shown that gambling attracts poorer people. A high-end casino will attract a more affluent clientele with limited tables, hotel rooms and more expensive dining options.
Encore Boston Harbor Casino initially tried to target more affluent customers from abroad. But after underperforming in the early months, it pivoted its marketing efforts to attract locals by offering free parking and reducing table minimums.
Casinos come with jobs, often promising to hire locals and build schools to train those who want to be dealers. New York lawmakers say the new casinos will create thousands of jobs for hospitality workers who have been unemployed during the pandemic.
Many low-paying casino jobs limit the potential for real economic growth, economists say. Last year, the average annual salary for a gambling service worker is $29,120, according to the Bureau of Labor Statistics.
Casino companies also rarely meet the revenue targets they present to state regulators when competing for licenses.
Even before the pandemic, four casinos in New york upper class failed to meet their revenue target, according to a 2020 report from the state administrator’s office. In 2019, casinos contributed $188 million in gambling taxes to the state, two-thirds of what they had expected in their licensing application.
However, the licensing fees alone are appealing to state officials: The bid to operate a casino in the New York City area will start at $500 million per license.
Casinos can be taxed at a much higher rate than other types of businesses, and money often goes to schools, police agencies, and infrastructure projects.
One 2011 article by Douglas Walkeran economics professor at Charleston University in South Carolina, found that casinos often provide a short-term increase in revenue that fades in the long run, partly because new casinos compete for the same customer groups continue to open nearby.
This effect has contributed to the struggles of Atlantic City, where several casinos have gone bankrupt over the past decade. Many states in the Northeast have legalized their own casinos, so those who used to drive to Atlantic City can now gamble closer to home.
In an interview, Professor Walker predicted that New York’s density and diverse entertainment options would limit the economic impact of casinos on the city.
Such was the experience in Philadelphia, where the first casino opened in 2010, according to Alan Greenberger, the deputy mayor in charge of economic development at the time. The SugarHouse Casino, today known as the Philadelphia River Casino, was built along the waterfront, just north of downtown.
The city government initially struggled against the casino, but Mr. Greenberger admits it has financially supported improvements to the drainage system and has employed hundreds of local workers. The business model, he said, is a “strange duality between good and bad”.
“The economic equation is: A lot of people are working, which is a good thing,” Mr. Greenberger said. “But they’re working for an operation that can get revenue from those who can least afford it.”
Finally, the two casinos, both located on the edge of the city and surrounded by large parking lots, have had little impact on the “character of life” in Philadelphia, he added.
“We are a big city with two casinos, but we are not a casino city,” he said. “And New York is not going to become a casino city either.”
Dana Rubinstein contributed reporting.
