Experts Eye Casino’s Dire Potential
By Ross Barkan
The sepia footage looks dated for several reasons – the overwrought narrator’s voice, the maladroit and seemingly staged smashing motions, the flowery string music – but nothing makes it seem more like an anachronism than one of the most powerful politicians in the United States lifting up a sledge hammer to pulverize a pile of dilapidated slot machines.
|Experts warn the economic impact of New York City’s first casino in the borough and the state may not be the jackpot many are expecting.
Back in the autumn of 1934, New York’s tiny yet pugnacious mayor Fiorello LaGuardia brought down a mallet on a trash heap of slot machines to demonstrate to Getty Pictures and the struggling city how much he reviled the presence of gamblers within city limits.
Today, just 77 years later, an equally tiny mayor, more little finance than little flower, has welcomed, along with a host of other politicians, the opening of Resorts World New York City in Queens, the city’s only casino. No one will catch Mayor Michael Bloomberg wielding a sledge hammer on slot machines anytime soon. Cheerleading for the casino, led by the likes of Councilman Eric Ulrich (R-Ozone Park) and State Sen. Joseph Addabbo Jr. (D-Howard Beach) have drowned out dissenters.
The casino’s actual economic impact will not, according to several experts on the effects of casinos on neighboring communities, be at all like Resorts World New York City President Michael Speller’s rosy vision. They agree that Resorts World will create a host of new problems that will do little to bolster Queens’ economic health.
“Social costs at casinos are $3 for every $1 in new tax revenue,” said Dr. John Warren Kindt, a professor of business administration at the University of Illinois at Urbana-Champaign. “And that’s a conservative estimate. In Queens, the cost will probably will be $6 in new social costs. That’s because people won’t be buying the necessary items – food, clothing, and other necessities – for their families.”
Kindt has written about the effects of legalized gambling on economies for decades. His research has unequivocally led to one fact: casinos do far more harm than good. In his estimation, consistent gamblers spend 10 percent less on food and 25 percent less on clothing.
Each slot machine, according to Kindt, on average takes $100,000 a year out of consumer spending. This is lost spending on consumer goods like cars, refrigerators, and computers, and lost money to Queens businesses. A 2006 study by the Federal Reserve of Boston found casinos bring in no new money to local markets, and simply substitute gambling for other goods and services. Connecticut, which has two large casinos, has been the worst job-creating state since 1987.
And the most comprehensive study of gambling in America, the 1999 National Gambling Impact Study, conducted by a Congress-charged commission to find out the impact of legalized gambling, recommended a moratorium on the building of new casinos. Kindt estimates, because of Queens’ population, each slot machine will possibly be taking in $500,000 in lost consumer activity every single year.
Some of the statistics Kindt cited are the product of Dr. Earl L. Grinols, a professor of economics at Baylor University in Texas. The author of Gambling in America: Costs and Benefits, he has also extensively studied the outcomes of legalized gambling on communities.
“Queens is uniquely situated to virtually guarantee this casino’s economic impact will be on the negative side of the ledger,” Grinols said. “What New York has done is shrunk the economy and given out special favors to connected people, and created some social costs related to gambling.”
Grinols described Resorts World as a glorified restaurant or entertainment venue that will simply take dollars that would have been poured into a City location, like a local restaurant or retail outlet, and instead pour it into the casino. The difference between Resorts World and an ordinary business is that Resorts World has an exclusive monopoly to operate in New York City. Empire Raceway and Casino, just above New York City, is located in Yonkers. They will compete for dollars but Resorts World can advertise itself as the only casino within the five boroughs.
Though Resorts World claims it will provide $350 million annually in tax revenue to the state to support education, Grinols argues the impressive number will not mean New York reaps any additional net revenue because of the social costs that come with legalized gambling. He is concerned that the casino will encourage pathological gamblers who will throw away their savings, and once destitute or near destitute, will turn to crime or in more tragic cases, suicide. Because it can take some time for people to become addicted, Grinols estimates that many of the casino’s social costs will not become apparent for three to four years.
“All things considered, adding up winners’ wins and losers’ losses, is this going to be good for New York State? The answer is no.”
And the jobs Resorts World casino generates will mostly likely be low-paying: according to the National Industry-Specific Occupational Employment and Wage Estimates; in 2010 the median wage for gambling industry employees including tips was $11.25 an hour.
Dr. Sigmund C. Shipp, a professor in the department of urban affairs and planning at Hunter College, said the work the casino provides will not lead anyone to prosperity.
“Locals are usually employed at the lowest level as porters, janitors, and unskilled workers who do backbreaking work at very low levels of pay and without worker related benefits,” he said. “Minorities and the poor are often the victims of these activities.”
This is the first story in a series about the impact of Resorts World Casino on Queens. The next story will focus on the casino’s potential sociological impact.
Reach Reporter Ross Barkan at email@example.com or (718) 357-7400, Ext. 127.