New York Comptroller Says Casinos ‘Not a Magic Fix’ for Local Host Governments

Posted on: August 4, 2023, 09:42h. 

Last updated on: August 4, 2023, 10:01h.

Devin O'Connor @CasinoorgDevinO Read More
Expertise: Asia Pacific Gaming, Commercial Gaming, Legislation, Politics.

New York Comptroller Thomas DiNapoli says that while commercial casinos provide new jobs and economic activity, gaming resorts are no “magic fix” for local host governments searching for substantial new tax revenue streams.

New York casinos Thomas DiNapoli
Resorts World Catskills, a more than $1.2 billion casino resort in upstate New York, has failed to live up to its preopening revenue projections. New York Comptroller Thomas DiNapoli says when casinos underperform, the biggest loser is often local governments and their taxpayers. (Image: The Poughkeepsie Journal)

New York voters in 2013 passed a statewide ballot referendum that authorized four upstate commercial casinos and three downstate. A 10-year moratorium on the state issuing the downstate licenses was included to allow the upstate resorts to open without competition from the critical downstate market.

The 2013 referendum passed with a little more than 57% support among the electorate. The measure was designed to promote job growth, increase public education funding, and allow local governments to lower property taxes on their constituents through a local share of the gaming proceeds.

In his report titled, “Revenue Impact of Commercial Casinos on Upstate Local Governments,” DiNapoli says the casinos’ preopening benefit projections largely haven’t been realized. And while COVID played a role in Rivers, del Lago, Resorts World Catskills, and Tioga Downs failing to live up to their premarket forecasts, the state comptroller says the data should serve as a warning for future casino host governments.

Property Tax Savings

The New York Gaming Location Facility Board is expected to issue the three downstate licenses next year. DiNapoli said the timing was right for his office to complete an assessment of how the four upstate casinos have benefited their host towns. DiNapoli says the local gaming revenue tax share allocated for local governments from 2017 through 2022 totaled nearly $176 million.

The funding allowed Tyre, Nichols, and Schenectady — respectively, home to del Lago, Tioga Downs, and Rivers — to either reduce, maintain, or only modestly increase property taxes since their openings.

Tyre reduced its property taxes by 42% from 2016 to 2017, and by another 64% from 2017 to 2018. Because of COVID and the temporary shuttering of del Lago, Tyre officials returned property taxes to their 2016 levels, as the casino tax benefit went to nearly zero. After del Lago reopened and tax receipts returned, Tyre reverted its property tax rate to its pre-pandemic levy.

Nichols reduced property taxes by 66% and 17% between 2017 and 2019. Despite COVID and Tioga Downs’ temporary closure, Nichols officials, DiNapoli said, “only increased property taxes modestly” amid the pandemic.

Schenectady has managed to reduce property taxes by about 1.4% since Rivers opened in February 2017.

Thompson’s government, conversely, has continued to raise property taxes since Resorts World opened in February 2018. Resorts World has been the biggest underperformer compared with its preopening revenue projections.

No ‘Magic Fix’

Some casino host governments have managed to reduce property taxes on homeowners because of the commercial gaming revenue. But the comptroller advised downstate host counties and municipalities not to overly bet on gaming to prop up their government budgets.

Casinos are not a magic fix that will solve local fiscal challenges,” DiNapoli said. “While casinos have generated local gaming tax revenue, the impacts vary for the communities that receive such revenues. I 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.”

Rob Doherty, chair of the Sullivan County Legislature, which is home to Resorts World Catskills, believes the state must do more to assure the future success of the upstate casinos. Doherty says the impending opening of downstate casino resorts poses significant threats upstate.

Doherty is hoping that New York will help subsidize the building of a major convention center at Resorts World.

“Why would you come here when you can go to a casino that has every amenity much closer to your home?” Doherty pondered to Spectrum News about downstate residents looking to gamble. “It makes no sense why someone would come up here without a convention center.”