Bloomberg resigned to the state's move toward gambling, but says it's no substitute for good policy
Mayor Michael Bloomberg reaffirmed today that he does not subscribe to the increasingly popular notion that legalized gambling would bolster the state’s economy. His position puts him at odds with the state’s legislative leaders, who are reportedly inching ever closer to putting a constitutional amendment on the ballot to legalize it.
“As you know, I’ve never liked gambling,” said Bloomberg, during a press conference announcing the planned relocation of Pearson PLC to to Hudson Square. “I think it’s regressive and history shows it really doesn’t do much for the neighborhoods around it, the gambling establishment. I also think that at some point you’re just gonna saturate the market.”
(Bloomberg's stance on legalized gambling has historically ranged from resigned to skeptical.)
According to a report in today's New York Post, Assembly Speaker Sheldon Silver, Senate Majority Leader Dean Skelos and Governor Andrew Cuomo are all on board with the idea of giving voters a chance to approve legalized gambling in New York.
The Post report mentioned "hundreds of millions" in potential new revenues. (One interested party I spoke to estimated the amount would be considerably higher, in the billions.)
“We have it all over, in New Jersey, Connecticut, Pennsylvania, in Native American casinos in New York, so we might as well take part in the revenues that come from casino gaming,’’ Silver told the Post.
Skelos spokeswoman Kelly Cummings told the paper that he “is supportive of a constitutional amendment that will let the people of New York decide.”
In August, Governor Cuomo said the state would have to "come to grips" with the implications of the expansion of gaming in surrounding states.
“It’s really not an issue anymore of ‘Well, if we don’t officially sanction it as a government, it’s not going to happen,’” said Cuomo, according to the New York Times. “If there is going to be gaming, how should it be done? And that issue, that question, is an important question for the state."
There are other questions, too, such as how much revenue gambling can actually yield for the state.
The idea of legalization would be to retain the money New Yorkers would otherwise gamble away at places like Foxwoods, an estimated 30 percent of whose costumers are estimated to be from here, according to Richard McGowan, a Boston College finance professor specializing in the gaming industry.
“I can see why legislators want it because it’s a quick way of reclaiming revenue from other states," he said.
“But the problem is, they immediately do what the neighboring state did when it had a monopoly and they immediately think that’s how much revenue they will raise, and that’s clearly not the case,” said McGowan.
In other words, with Massachusetts nearing the legalization of gaming, and Pennsylvania already on board, “at some point," as Bloomberg put it, "you’re just gonna saturate the market.”
Certainly that’s proven true in Atlantic City, which has suffered badly since losing its regional monopoly on casino activity, and whose cash-cow status New Jersey has struggled to resuscitate with increasing desperation. Since the legalization of slots in neighboring Pennsylvania in 2004, Atlantic City gambling revenues have dropped between 10 and 15 percent, according to McGowan.
None of this takes into account the hidden costs often associated with legalized gambling, including increases in personal bankruptcy and addiction, which according to McGowan, tends to afflict both the elderly and those between 18 and 25 years old.
“When you open a casino, I will grant you it’s a very small percentage, but about 1.2 percent of the population gets addicted to gambling,” said McGowan, “And that’s a cost you have to pay.”
There is also the effect that casinos have on neighboring businesses.
When gambling was legalized in post-white-flight Atlantic City in 1976, the legislation required that casinos develop adjoining hotels and public spaces. While the intent of the legislation may well have been laudatory, the effect was to redirect toward the casinos revenue that would otherwise have been spent in restaurants and bars and clubs in downtown Atlantic CIty.
Genting, the Malaysian-based gaming giant that in October will inaugurate 4,525 slot machines at the Aqueduct Race Track in Ozone Park, Queens, has been lobbying for a constitutional amendment that would allow table gaming in New York State. Any change to the constitution requires approval by two consecutive state legislatures, and then a ballot referendum, which means the earliest legalization could happen would be November 2013.
Bloomberg's philosphical disagreements notwithstanding, his statements don't seem to indicate any will for an actual battle with legislative leaders on the issue.
"If you're gonna have it, we might as well, I suppose, have it here, and get the benefit from it," said Bloomberg. "But I just never thought it was a good substitute for ... intelligent fiscal policy."