Several years of legalized gambling in upstate have yet to definitively answer whether New York casinos are a bad bet. But with nearly a dozen bids on the table from gambling operators and developers vying for three available downstate casino licenses, the odds don’t seem to favor anyone but the house coming out ahead.
A recent audit by the state comptroller cautions against local communities banking on tax windfalls from legal gambling. It is a sentiment that opponents of the various downstate New York casino proposals will undoubtedly seize upon.
However, there is additional information contained in New York State Comptroller Thomas P. DiNapoli’s filing that proponents of the downstate NY casino projects may find interesting.
NY casinos report can be viewed through many lenses
Let’s start with the good news for the casino foes, which would be bad news for the gambling expansion allies.
Most NY media seized on the comptroller’s synopsis that none of the upstate commercial casinos are matching up to revenue projections and only one property is meeting its gaming tax projections.
The four casinos being referenced are:
- del Lago Resort and Casino
- Rivers Casino and Resort
- Resorts World Catskills
- Tioga Downs Casino
“Casinos are not a magic fix that will solve local fiscal challenges,” the comptroller said in prepared remarks accompanying his findings.
From 2017 to 2022, NY’s licensed commercial casinos brought $176 million in gaming tax revenue to host and regional local governments. DiNapoli said that “while casinos have generated local gaming tax revenue, the impacts vary for the communities that receive such revenues.”
He goes on to say:
“It’s my hope that this report gives state and local officials a clearer perspective that can help potential host communities avoid the pitfalls that arise with misguided expectations about the public benefits of casinos. They are not a sure bet.”
The other side of the NY casino coin
Despite the harsh tone and negative initial reception, the state audit may ultimately be a larger benefit to those in favor of – or those seeking – downstate casino licenses.
For one, gross gaming revenue generated by the state’s commercial casinos went up in 2022 and exceeded pre-pandemic (2019) levels, a sign that customer demand has returned. The casinos are already ahead of last year’s pace through the first half of 2023, according to state data.
Secondly, while it may be true that the four upstate NY commercial casinos are falling short of expectations, the state’s legal loopholes are compounding the problem. A 2021 amendment to the Racing, Pari-Mutuel Wagering and Breeding law reduced local gaming tax collections in two ways, according to the comptroller’s report.
One change allowed casinos to petition state gambling regulators for a lower tax rate on slot and electronic table games. Three of the four casinos were successful in doing just that in 2022. The other is waiting on the governor’s approval.
NY sports betting always takes the air out of the room, huh?
The other big change was online sports betting in NY.
After the Jan. 1, 2022, launch of NY sports betting, the Empire State became the largest legal market in the US. By the end of the year, land-based sportsbooks reported a 66% decline in business. That resulted in lower local tax distributions because a percentage of taxes from in-person sports gambling revenue is allocated to host municipalities and counties.
Online sports gambling does not have a “local government gaming tax component,” according to the state comptroller’s report. The rapid migration from in-person to online betting cost local governments around $300,000 last year, according to DiNapoli’s report.
Anybody in NY interested in lower property taxes?
Last, but not least, the state comptroller’s report gives some credence to the idea that gaming revenue can offset residential and non-casino business tax obligations.
In 2022, gambling taxes generated by the four commercial casinos in upstate NY were “significant for some of the host and non-host local governments,” DiNapoli wrote.
One bullet point in the report flatly states:
“Gaming taxes had a particularly large effect on the finances of the three smaller host towns (Nichols, Tyre and Thompson), which were able to reduce real property taxes significantly.”
Take your time, but hurry up already
The NY Comptroller’s report underscores the due diligence required by state and local officials before making or enacting policy and regulatory decisions concerning casino gaming.
The report states: “For the municipalities which will host the soon-to-be awarded downstate casinos, an appropriate plan for the new revenue will be key.”
DiNapoli’s findings pertain only to state-licensed commercial casinos. Native American casinos operated on tribal land under state-approved gaming compacts were not included in the analysis.
The report did not examine the non-financial impacts of hosting a casino on issues like gambling addiction or quality of life issues. The comptroller’s office will be releasing a report examining those issues later this year.
