Making the News

New York Times

Originally Published:Sunday, July 25, 2010
http://www.nytimes.com/2010/07/26/nyregion/26towns.html?_r=1

States Hooked on Gambling for Revenue

By Peter Applebome
New York Times

From the beginning of our joy ride with legalized gambling, there was a worry that more gambling would mean more overextended suckers addicted to slots, poker tables, lotteries and roulette wheels.

Now we know it's true - only the addicts are not necessarily day trippers on tour buses.

They are also states, like Connecticut, New Jersey and New York - and most of their neighbors - desperate for cash, averse to raising taxes and doubling down on the one business that seemed to be eternally growing until it wasn't.

How else to explain a professed small-government conservative like Gov. Chris Christie of New Jersey last week proposing a state takeover of the floundering Atlantic City gambling strip? Casino revenue there is down almost 30 percent from the same period in 2006.

Indeed, like the ball on a roulette wheel popping up and down before it finally lands, the casino story lines are hard to keep straight.

Maybe New York will finally build one at Aqueduct. Maybe the Shinnecock Tribe will build one at the Nassau County Coliseum, or maybe it will build one somewhere in Suffolk County. But in a glutted market, can Long Island and New York City support two new casinos, let alone one? Connecticut's two mega-casinos provided less revenue to the state last year than at any time in a decade. Out of nowhere a group calling itself the Connecticut Coalition for Gaming Jobs pops up to contest federal recognition of the Shinnecocks, for fairly obvious reasons. It's getting a little claustrophobic in here, isn't it?

"The New York metropolitan market is probably approaching saturation if it's not already there," said Robert B. Ward, deputy director of the Nelson A. Rockefeller Institute of Government in Albany. "At some point you just end up with the shopping mall syndrome - whoever has built most recently with the shiniest properties will get the customers and the other properties will deteriorate, and no one will know what to do with them."

According to a report in September by Mr. Ward and Lucy Dadayan of the Rockefeller Institute, state and local gambling revenues from gambling emporiums and lotteries declined nationally by 2.6 percent in 2009, the first decline in three decades. State and local revenues from commercial casinos (excluding Indian ones) in the 2009 fiscal year declined by 8.5 percent.

All three states in the New York metropolitan area get a larger percentage of their state-generated general revenue (excluding federal sources) from gambling than the national average. In the fiscal year 2008 it was 4 percent in Connecticut, 3.3 percent in New Jersey and 3.1 percent in New York, compared with 2.3 percent nationally. They are not huge percentages, but they are big enough to mean the difference between a budget that is balanced and one that is not. And that only includes direct state receipts, not jobs, revenues from shops and other economic benefits.

SO even with revenues declining, at least 25 states have contemplated expanding gambling over the past year. Mr. Christie's plan is the latest sign of how much the states have invested.

"The states aren't the ones who are going to go into bankruptcy," said Michael Diamond, vice president for research at Spectrum Gaming Group, which studies the casino industry. "They might see their revenue stream come down, but they're going to encourage as much activity as someone is willing to invest in."

Like those dorky poker players behind wraparound shades on ESPN, all three states have a distinctive game to play. Mr. Christie's proposal is essentially going all in on Atlantic City. It may be a somewhat dinged-up brand, but he's betting it's one that's too big to fail, and, with its Boardwalk and seashore, it is the only gambling center in the region that can lure gamblers and families.

Connecticut is like the aging champ, trying to keep that poker face but twitching as revenues fall even before the possible addition of casinos in Massachusetts and New York, which would mean more of a pinch.

New York, which is still exporting gamblers to New Jersey and Connecticut, has the biggest pile of chips to bet if it figures out where to put them down. So glut or not, New York is still looking to add capacity, which means either cannibalizing its neighbors' business or luring new suckers into the game. It is not an encouraging picture, but as they say at the casinos and the state capitals, you can't win if you don't play.

 

E-mail: peappl@nytimes.com

 

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