May 29, 2014

In Report, State Comptroller Is Cautious About Benefits of Casinos

By Jesse McKinley
The New York Times

Sounding a cautionary note about expanded gambling in New York State, Comptroller Thomas P. DiNapoli warns in a new report that casino complexes planned for upstate will face stiff regional competition and that much of the new revenue anticipated from the casinos will come from New Yorkers, not necessarily from out-of-state visitors.

The report, to be released Friday, is far more guarded about the benefits of new casinos than Gov. Andrew M. Cuomo, who has promoted them as a powerful economic development tool for beleaguered parts of the state.

While the report says casinos are likely to enhance state revenue and create jobs, Mr. DiNapoli also says economic benefits statewide may be uneven, with gains in areas with casinos offset by job losses elsewhere.

In an interview, Mr. DiNapoli said the report raised doubts as to whether casinos were “a magic solution” to deep-rooted economic challenges.

“There will be winners and losers,” he said, adding: “The jury is still out as to what the long-term impact is and whether that might well be as positive as proponents have argued.”

Gambling officials were dismissive of the report, adding that it was not surprising that New Yorkers — already avid gamblers — would make up much of the new casinos’ customer base.

“The ‘study’ is most notable for its utter lack of facts,” said Lee Park, the director of communications for the New York State Gaming Commission. “It is beyond dispute that more than a billion dollars each year are being spent by New Yorkers at out-of-state casinos. That’s money that can be used here for education, tax relief and to create jobs.”

The report comes as a June 30 deadline approaches for final bids for up to four casino licenses, which were authorized by voters in a statewide referendum last fall. Nineteen entities are still in the running, including major developers like the Genting Group and Caesars Entertainment.

The first new casinos could open as soon as 2015, officials say.

In promoting his casino plan, Mr. Cuomo said he imagined resorts enticing some of the tens of millions of tourists who flock to New York City every year to extend their visits to other parts of the state. “I believe casinos in upstate New York could be a great magnet to bring the New York City traffic up,” he said in last year’s State of the State address.

The Cuomo administration’s estimates suggest that new casinos will generate hundreds of millions of dollars a year in state and local revenue, create thousands of jobs and lead to $1 billion in construction spending.

But the comptroller’s report cautions that many gamblers, shoppers and diners at casino-resort complexes will be drawn from inside the state. “In terms of the state’s economy, such activity primarily represents substitution of gambling losses for other consumer purchases (entertainment or retail sales, for example),” the report says, “rather than net new business.”

The report notes the crowded marketplace the casinos will enter, a result of increased saturation of casinos across the country. On the East Coast, recent troubles have included budget bailouts in Delaware and bankruptcies in Atlantic City, it said.

Mr. DiNapoli said that he welcomed new revenues and jobs and that he had no opinion as to whether casinos were a good or bad idea. “We just want people to have realistic expectations as to what may, or may not, come from this,” he said.

A version of this article appears in print on May 30, 2014, on page A23 of the New York edition with the headline: In Report, Comptroller Is Cautious on Casinos.