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While the state’s education budget was cut in scal 2020-21, it rose 13.6% from last year to $44.9 billion in the latest budget.

A ash in the pan

While three new licenses will certainly bring new gambling tra c to the Big Apple, Lucy Dadayan, senior research associate at Urban-Brookings Tax Policy Center at the Urban Institute, said the windfalls of new casinos tend to be short term.

“Whenever you open a new casino, you usually of course get some revenues, but the growth over time is not enough to keep up,” she said.

States began rapidly opening commercial casinos after the Great Recession as a way to ll co ers. But over time, Dadayan said, most have found it hasn’t paid o . Average tax revenues from the four upstate casinos has been $14.3 million per month so far this year, below the peak of $15.7 million in 2019.

With more and more opportunities to gamble, each casino is ghting for a smaller share of the pie. at’s worsened with the rise of virtual gambling options, mobile sports betting among them.

State-licensed casinos are not the only options for slots and table games in the state. New York hosts 12 tribal gaming casinos operated by various indigenous groups, and another, the Shinnecock Casino Hamptons, is under construction in Southampton. ese casinos negotiate di erent tax rates, but the rates are lower than state-licensed facilities. Tribal gaming casinos aren’t required to publicly report their revenues and tax payments to the state’s website.

With more outlets for gambling, Dadayan said there shouldn’t be an expectation for long-term growth once the downstate licenses are awarded.

“It’s the novelty of it in the beginning. Once the novelty wears o , it’s too much competition,” Dadayan said.

A risky bet

Brandy Richards, team leader at the Northeast Problem Gambling Resource Center, said any rise in revenue means a rise in the number of gamblers seeking help for addiction. New casinos present unique risks—experts say casinos are seen as a place for “escape” gambling, more so than sports betting or the lottery.

“It may start out as something recreational, but at some point it transitions,” she said. “Eventually they’re using that as an unhealthy means of coping with some of the other life stressors that are going on.” e law governing licenses requires that casinos deposit $500 annually for every approved slot machine or table, and those funds are required to be used exclusively for problem-gambling treatments. Addabbo co-sponsored a bill in June that would create a council to recommend how that money, about $2.83 million annually, be spent. e Assembly and the state Senate have passed the bill, but it has not yet been delivered to Hochul’s desk.

Richards has ideas on the best uses for that funding. She said organizations such as hers need more money to hire peer counselors, start education programs in schools and operate a 24/7 call line.

“We get people calling in the middle of the night who are in a casino and have reached that moment where they need help,” she said. “ ey can leave messages on our machine, but we need to reach people at that moment.” ■

FULLY LICENSED CASINOS IN NEW YORK HAVE GENERATED MORE THAN $800M IN TAX REVENUE SINCE 2017

Tax revenue per casino since 2017

$300M

$250M

$200M

$262.3M

$222M

$199.8M

$150M

$144.2M

$100M

$50M

0

Rivers Casino Resort del Lago Resort & Casino

SOURCE: New York State Gaming Commission Resorts World Catskills Tioga Downs Casino Resort

OP-ED DO THE BENEFITS OF CASINOS OUTWEIGH THE SOCIETAL COSTS? HISTORY SAYS NO

AS THE CITY FACES DECLINES in commercial property taxes and tourism dollars, casinos might seem like an attractive expansion for the city’s tax base. But casinos are not just any kind of entertainment. Although operated by businesses and taxed by states, they can create costs that are paid by all taxpayers, not just by gamblers. Supporters argue that casinos promote local economic development, create jobs and provide a voluntary expansion of entertainment options. But LUCY DADAYAN casinos can lead to higher crime and bankruptcy rates in a local community as well as addiction among some gamblers. The jobs they create may not include useful or transferable workforce skills that can be applied elsewhere.

Clearly some of the arguments made by proponents and opponents can be true, and gambling isn’t the only legal activity with negative externalities. Communities, however, need to gure out if the bene ts outweigh the costs.

Before 1990 casinos were legal only in Nevada and New Jersey. In the past three decades, about two dozen more states have joined the casino club. But this large-scale expansion across America did not lead to large increases in revenues from casinos. The average annual growth rate for casino tax revenues for the nation was only 0.2% in in ation-adjusted terms between scal 2014 and scal 2019. By comparison, the average annual growth for total state tax revenues was 2.5% for the same period. Clearly other forms of tax revenues have seen stronger growth over the same time.

In scal 2010 tax revenues from casinos represented more than 5% of total state tax revenues in six states: Delaware, Indiana, Louisiana, Nevada, Rhode Island and West Virginia. As of scal 2021, Nevada, the destination hub for casino entertainment and home to about 60% of all casinos in the nation, was the only state where casino tax revenues made up more than 5% of the total state tax revenue.

All other states saw continuous declines. In other words, history indicates that revenues generated from casinos are often short-lived and not sustainable in the long run.

Earlier this year of cials in New York approved the opening of three full-service casinos downstate. Casino industry giants are considering new locations in Times Square or Hudson Yards. The city is a tourism hub, but whether a location makes sense depends on whether going to a casino would be a substitute for or complement to existing entertainment options, including the two casinos already operating in the city. A new casino in Manhattan could take business away from other entertainment activities, particularly Broadway theaters, which are still scrambling from the consequences of the pandemic.

It’s often the case that interest-group lobbying plays a signi cant role in politics. It will be important, however, for state and local of cials to consider not only the economic and scal bene ts of new casino tax revenues, but also the possible social and economic costs for New Yorkers and the impact on other businesses. The potential costs might outweigh the bene ts, especially given the possible substitution impact on other entertainment venues. The history of casino revenues indicates that they may generate funds in the short term, but they will not make a dent in efforts to balance education or health care budgets. ■ Lucy Dadayan is a senior research associate with the Urban-Brookings Tax Policy Center at the Urban Institute, where she is leading the State Tax and Economic Review project.