Crapping Out in New York: A Sophisticated Argument

In the weeks remaining until the November election, voters in NY will contemplate whether to amend the state constitution to permit seven commercial casinos. Who could object to: let the people decide.

Governor Cuomo, when recently commenting on whether he thought the ballot question would pass, had this to say:

"I think that's going to be the natural knee jerk for people" to reject more gambling ... "You have to say, 'Hold on a second. It's not really gambling versus no gambling. I know we have to change the constitution, but we already have gambling. We just don't call it gambling.' I think it passes, but it's a sophisticated argument, no doubt."

Hmm. The NYS Lottery spends a fortune each year to advertise its menu of over a dozen ways to bet on what it calls: Jackpot, Daily, and Instant Scratch-Off 'games'. And though his remarks might suggest otherwise, presumably Mr. Cuomo does have confidence in our ability to understand what constitutes gambling. So what's he really getting at? I'll suggest trouble may be brewing in Oz.

That trouble begins with a not-so-sophisticated question: Will more Albany gambling benefit taxpayers? The short answer is, it won't, if we're honest about who'd get stuck with the tab. Our Governor is having trouble selling what he wants voters to buy not because his argument is sophisticated, but because most of us aren't stupid, and because something about his casino pitch smells fishy.

To begin with, in his July 31 press release, he promoted the Upstate NY Gaming Economic Development Act:

... a comprehensive new law that, pending approval of a referendum [casino] this fall, will establish four destination gaming resorts in Upstate New York and boost tourism and economic development in communities across the region. Under the casino gaming plan outlined in the new law, all localities in the state will share in increased education aid, or lower property taxes, no matter where the casinos are located ...

So if he really believes New Yorkers are having trouble distinguishing 'games' from 'gambling', he might reflect on the central role he continues playing in generating that confusion: from the UNYGEDA bill title, to his press release, to his May 9 press conference [Governor Cuomo Unveils Resort Gaming Destination Plan], and his January 9, 2013 State of the State.

And as unsophisticated as some of us are, we understand this economic development business is tough stuff. We understand a few other things too:

  • Destination resorts don't require a casino (Disneyland, anyone?).
  • What will those three casinos that eventually open in the NYC metro area do to upstate economies (the proposed constitutional amendment permits seven, yet just four are being authorized upstate)?
  • Without enormous public tax subsidies, why would investors build upstate casinos they know would have to compete directly with those in the NYC metro area?

The casino question isn't black & white. It insults readers to imply a casino doesn't employ people or confer financial benefit to certain businesses. But it's equally insulting to suggest it provides the bushel-of-only-benefits its promoters would have us believe it does -- tapping ruby slippers won't take us home.

Casino gambling provides entertainment for some people, yes, but it isn't a foundation on which to build communities, even in upstate NY where I happen to live, for two central reasons:

  1. In the long run it isn't likely to pay for itself.
  2. Sustaining profits requires it to nurture a steady stream of people unable to control their compulsion to gamble, and under Mr. Cuomo's plan, that steady stream is likely to be supplied from local communities, particularly those considered to be disadvantaged.

However indifferent some voters might be to reason 2, a restatement of that not-so-sophisticated question should interest all of us: if an industry gives us $1 and takes $3, did it really give us $1? That's because much of the social costs for gambling disorders get passed onto the public and are enormous: families who through no fault of their own end up having to rely on public assistance, the burden of unpaid debts passed onto businesses (and consumers), and money required for law enforcement to address gambling-related crimes are just some of the ways those costs are hidden from the public's view. So there's good reason the amendment, if voter approved, won't pay for itself -- a recent examination of the aid to education and property tax relief being promoted under Mr. Cuomo's plan isn't reassuring.

And asking voters to approve the constitutional amendment is also asking us to buy into Albany's intention to rely on an industry that markets to, and derives as much as 50% of its revenue from, people unable to control their compulsion to gamble -- in the name of education and property tax relief, of course. Many voters if asked directly to support such an intention would take a jaundiced view; it isn't in their DNA. It would be like asking them to support a scheme designed to cut state health care costs by restricting emergency room services to imminently life-threatening situations -- you get to the ER at midnight after breaking your leg and you're told "sorry, you'll live; please go away." So there's little wonder Governor Cuomo refuses to come clean with this aspect of his casino plan.

All this gets us back to who could object to, let the people decide? The sophisticated answer is, no one, assuming voters have the information to make an informed decision. Facilitating that information is a constructive roll Albany could have played but chose not to -- so far it's been strictly the bushel-of-only-benefits. There's that fishy smell again. After all, if this casino business is even just half the boon its promoters have it cracked up to be, then what's the problem giving voters the full picture?

Message to the unsophisticated: hold onto your wallets.

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