There is currently no more controversial issue in Nassau County than whether or not a Video Lottery Terminal Casino should be allowed at Belmont Park.
Residents are powerfully polarized on both sides of the issue, with strong reasons for and against gambling in their community.
This article reviews the economics of the casino and explains why it’s a poor financial proposal.
The Upstate NY Gaming Economic Development Act of 2013 allowed four destination gaming resorts (Las Vegas style complexes), in Upstate New York, and up to three in the New York City area, to boost tourism and economic development.
The same legislation also authorized Nassau and Suffolk OTB to establish a more modest video lottery gambling facility in each county, at an OTB-sanctioned site, with up to 1,000 machines.
However, the Long Island facilities will be far less attractive.
Long Island’s “casinos” will not have hotel rooms, fine dining, first-rate entertainment or space for conventions.
In New York there are currently nine state-run casinos and five tribal casinos, with three new licensed commercial casinos under development.
Closer to home that includes the two largest New York State facilities at Aqueduct and Yonkers Raceway, both with around 5,000 VLT machines.
If Suffolk opens their proposed 1,000 VLT casino it will place Nassau smack in the middle of all three New York metro locations.
This will hurt Nassau’s proposed casino because the allure of two larger entertainment complexes along with Suffolk’s similar facility will siphon off participants.
If gambling is truly done for entertainment, then players will be attracted to the more exciting, larger venues.
Therefore, if the casino will just be a “Walmart” type gambling hall, as planned, the only people it will attract are local residents. Resorts World Casino at Aqueduct, the largest in the state, is only eight miles from Belmont Park. Where would you prefer to go?
In New York State the average VLT machine is calibrated to pay 94.5 cents for every dollar wagered.
Putting it another way, you are expected to lose 5.5 cents on every dollar gambled.
The Gross Gaming Revenue per visit, or loss, is about $87.
Each VLT machine on average generates about $300 per day of revenue, and by doing the math Nassau’s 1,000 machines are expected to generate about $110 million in gross revenue per year.
That means Nassau residents are expected to lose $110 million per year gambling.
Local businesses will certainly suffer, as dollars spent in casinos will mean fewer dollars spent in local restaurants and stores, and on other entertainment options.
This, of course, will diminish the sales tax revenue, desperately needed to balance the county’s budget.
What most people don’t realize is that due to complex formulas created by the State of New York, the majority of the revenue generated by the proposed casino will be split up, and end up in New York State coffers not Nassau County’s. In a December 14, 2014 New York Times article, OTB officials projected the slot parlor in Nassau would generate about $150 million in net revenue.
Joseph Cairo, the president of Nassau OTB thought if those revenue numbers were accurate then “we’re probably talking about $19 million to $20 million going to the County each year.”
The only way those projections are realized is if the Belmont Park casino matches revenue numbers from the most successful casino in New York State, which is the Resorts World Casino at Aqueduct. This just doesn’t seem likely.
Politicians love casinos because they raise revenue without raising taxes.
Residents dislike them because of the potential to bring traffic, crime and the social ills associated with gambling.
What VLT casinos don’t do is grow the economy and attract capital along with the fresh entrepreneurial energy that comes with it. You have to ask yourself, “Is a casino at Belmont the best use of valuable real estate in a struggling community?”
One has to look no further than Atlantic City to see the diminishing returns when casino gambling reaches its saturation point. With the over-construction of additional facilities in many counties in New York and every neighboring state, future returns will not reach rosy projections. In summary, residents are expected to spend (lose) up to $150 million, so the county can gain around $20 million in revenue.
All of this comes at the expense of other entertainment options, goods and services.
That doesn’t seem like a very good bet.