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Understanding the odds

State gaming officials’ reaction to Comptroller Thomas DiNapoli’s new report on gambling in New York was swift and, it would seem, telling. The study, a Gaming Commission spokesman said, was “most notable for its utter lack of facts.”

Those with less of a vested interest might take a different view. Indeed, the report appears to be chock-full of facts, and its conclusions seem cautiously stated.

In particular, the report’s assessment of the new upstate commercial casinos authorized by voters’ approval of a constitutional amendment last fall is strikingly clear-eyed. “The planned casinos,” it states, “will likely result in new jobs in communities where casinos are located—although, from a statewide perspective, economic gains may be offset by losses elsewhere.”

The Cuomo administration’s view is much rosier. It maintains that the four planned upstate casinos will generate more than $400 million annually in tax revenues allocated to education and aid for local governments, while resulting in thousands of new jobs.

Yes, the new casinos likely will deliver a net gain in tax revenues, the DiNapoli report concludes, but how much is difficult to say because of factors such as the potential loss of revenue from existing gambling operations.

In addition, while the new casinos will bring gambling dollars into the state, “much of the betting and revenue will come from in-state residents.” For the overall New York economy, “such activity primarily represents substitution of gambling losses for other consumer purchases (entertainment or retail sales, for example) rather than net new business.”

The impact of competition also is hard to estimate. The marketplace for legalized gambling has expanded rapidly, in places as nearby as Pennsylvania. A proposed constitutional amendment would add sports betting to the list of legalized gambling in New York. And online gambling could loom large in the not-too-distant future.

The state’s voters have spoken on new casinos; 57 percent gave their approval last November.

The DiNapoli report has no quarrel with that. Rather, it underscores what should be obvious: the need to understand and prepare for the consequences—positive and negative—of that decision.

6/6/14 (c) 2014 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email [email protected]

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