Recently, the governing bodies of The Town of Florida, City of Amsterdam and Montgomery County all approved resolutions supporting the concept of locating a casino near thruway exit 27. This seems to be a rare instance when political parties and municipalities all appear to be in agreement. However, it’s worth remembering that there was one dissenter in each of the three votes. Residents of the Town of Florida also voiced concerns before their board’s vote. I think it’s time we start digging a little deeper into the issue to understand how this type of development might shape the region’s society and economy.
The Montgomery County region clearly needs an economic shot in the arm, hardly anyone disputes that. However, it’s far from a sure thing that a casino will bring long-term economic prosperity to the area. When looking at research done on the impact of adding a new casino to a local area, different sources come to different conclusions.
From a PBS Frontline report:
In 1994, all of the various experts who testified before the U.S. House of Representatives Committee on Small Business criticized the impacts that casino-style gambling activities inflict upon the criminal justice system, the social welfare, system, small businesses, and the economy (Congressional Hearing 1994). Utilizing legalized gambling activities as a strategy for economic development was thoroughly discredited during the hearing.
From the American Gaming Association:
Research conducted on behalf of the [National Gambling Impact Study Commission] confirmed that casino gaming creates jobs and reduces the level of unemployment and government assistance in communities that have legalized it. The University of Chicago’s National Opinion Research Center (NORC) found that communities closest to casinos experienced a 12 percent to 17 percent drop in welfare payments, unemployment rates and unemployment insurance after the introduction of casino gaming.
From the California Research Bureau:
The smaller the region the more likely a gambling project will be a benefit to the region. This statement is true for the simple reason that the smaller the region, the more likely the gamblers will come from outside of the region…Also the smaller the region, the greater chance that the costs of gambling, especially those of pathological or problem gamblers will occur outside of the region. Hence, gaming is likely to benefit an Indian reservation or a small city more than an entire state or country.
So for our situation, I think there are three big questions that need to be studied as this process moves forward:
1. How well will the casino draw people from outside Montgomery County?
This is probably the most important question to answer because if the casino fails to draw people from outside the county, it may hurt the economy more than it helps it. If the casino has a restaurant, bar and hotel, it could put other smaller local venues out of business in the same way “big box” chain stores have done already.
A lot depends on the marketing strategy of the casino, and that’s something we need to look at very carefully as plans take shape.
One aspect that might ensure that we draw in people from outside the area is if the casino incorporates an entertainment venue that features big name acts, similar to what Turning Stone offers.
If everything is done right, and the casino is able to draw customers from outside the area, it could provide the one asset that local restaurants and retailers desperately need: traffic.
2. How will customers find their way from the casino to downtown?
No doubt, the city stands to make some money from providing water and sewer hookup. But the expectation everyone seems to have is that the increased traffic will help local businesses. But if a casino is built, we shouldn’t assume that visitors will naturally find their way down Route 30S and stumble into our downtown. In fact, some research compiled by the California Research Bureau suggests the opposite can happen:
Gaming in Atlantic City, like Las Vegas, has been a successful economic development tool. It has resulted in the building of many large facilities and over forty thousand jobs have been created. The success of gambling in Atlantic City, however, has done little to revitalize the rest of Atlantic City and its business community. Atlantic City has been described as two cities. One is the casinos and the other is a city of boarded-up buildings with a unemployed minority work force. Gambling has largely failed in achieving the objectives of job growth for local residents and city-wide economic development.
Another criticism of gaming in Atlantic City is that it doesn’t support complimentary businesses in the community such as restaurants because these facilities are all in the casinos. In Atlantic City, the number of restaurants dropped 40 percent since 1977. Most people associated with the industry note that people don’t venture far from the casinos. Because of this concern, Louisiana legalized a casino but it cannot have restaurants and hotel facilities.
How can Amsterdam make sure that our local businesses benefit from the potential traffic? I can think of a number of ways:
a) Restrict the establishment from having a restaurant and hotel just like Louisiana did. I’m not sure if that’s feasible, but it’s worth looking at.
b) The city should have a well-developed marketing plan aimed at attracting visitors to the casino to attractions in the city such as Bridge St., Main St., Riverlink Park, the golf course, Mohawks games, etc.
I think Saratoga Springs serves as a great example of offering an entire “experience” rather than just gambling. People go to Saratoga Springs not just to gamble, but to enjoy the atmosphere, culture and nightlife. I believe Amsterdam has the makings of a similar (maybe less sophisticated) experience.
c) Part of any deal with the city should include some sort of guaranteed access to signage and an information booth/kiosk at the establishment. People from outside of the area may or may not know about what the rest of the region has to offer. We need to make sure they get the message!
3. How much will infrastructure maintenance, law enforcement and other costs burden our municipalities?
One might expect that increased economic activity always lowers taxes. But we know from experience that isn’t always the case. Back in 2012, we were surprised that with all the booming economic activity on Route 30 in the Town of Amsterdam, that town officials were considering a tax increase to cover increased road maintenance costs. Why weren’t increased property and sales tax revenue offsetting these costs?
Casinos are traditionally taxed at a much higher rate than other standard businesses. But we still need to have a handle on what the increased costs will be and whether the increased property tax, sales tax and services revenue will make up for it.
And we can’t overlook the possibility that some of our societal problem could be worsened as well. From the PBS Frontline report:
Legalized gambling activities act as a regressive tax on the poor…Specifically, the legalization of various forms of gambling activities makes “poor people poorer” and can dramatically intensify many pre-existing social-welfare problems.
Finally, I think it’s worth considering a historical point that the same report makes:
The recriminalization of gambling activities occurred 100 years ago after a brief gambling boom following the Civil War. Most state legislatures utilized constitutional provisions to recriminalize gambling, because lawmakers wanted to make it as difficult as possible for future generations to experiment with the classic “boom and bust” cycles and the concomitant socioeconomic negatives occasioned by legalized gambling activities. To paraphrase Georg Hegel’s common quote, “those who forget the lessons of economic history are condemned to relive them”
If we can get solid answers to the above three questions, we’ll be in a much better position to avoid the known pitfalls of legalized gambling. I care very much about our community and I want to see economic revitalization happen. But we need to make sure we aren’t sacrificing long-term stability for short-term gain.
