The movie Field of Dreams added the phrase, “If you build it, he will come,” into our lexicon. So much so, it looks like the state of New York took that phrase very literally when it decided to green light four commercial casinos.
The problem is, the state didn’t stick around to watch the end of the film where the true meaning of the phrase was revealed.
If you didn’t watch until the end, you missed the whole point of the movie. You end up thinking the film was about building a baseball field in the middle of nowhere that magically attracts visitors. In real life, New York copied this model and built four casinos in the middle of nowhere.
The difference between Field of Dreams and New York’s casinos? People in major population centers aren’t making the several hours long drive to go to the casinos.
The results… not so good
New York’s four new commercial casinos are as follows:
- del Lago
- Tioga Downs
- Rivers Casino Schenectady
- Resorts World Catskills
All four came up well short of their initial revenue projections last year. At least two, Rivers and del Lago, even petitioned the state for tax breaks. So far, the state has emphatically rejected the requests for help.
In its first year, Tioga Downs missed the low end of its tax target by 25 percent.
- In its first year, del Lago missed the low end of its tax target by 27 percent.
- In its first year, Rivers missed the low end of its tax target by 33 percent.
- Resorts World has only been open for two months.
On Dec. 2, 2016, Tioga Downs became the first of the four new casinos to open its doors.
Tioga Downs was the closest to hitting its full Year 1 tax target of $31-$38 million, but it was still well short of the initial projections. The property sent $23.3 million to the state and local municipalities in FY 2017/2018.
del Lago Resort and Casino
The second of the four new casinos to come online was del Lago, which opened on Feb. 1, 2017.
The casino was projected to generate $59-$76 million in gaming tax in Year 1, but only managed to generate $43.29 million from $145.59 million in gross gaming revenue.
Rivers Casino and Resort Schenectady
Rivers had its ribbon-cutting ceremony a week after del Lago, opening to the public on Feb. 8, 2017.
In FY 2017/2018, the property sent $45.94 million in gaming tax to the state and local municipalities. That was well short of the estimated $69-$86 million it was projected to generate over the course of its first 12 months.
Resorts World Catskills
The final casino to open its doors was also the biggest, Resorts World. The $1.2 billion casino in the middle of nowhere opened on Feb. 8, 2018.
Resorts World hasn’t been open long enough to compare its actual revenue with projections, but thus far the numbers are falling well short of the projections.
The lesson of NY casino expansion
The New York casinos picked locations where they thought they would create the most economic benefit. The locations were also selected with appropriate buffer zones around the new and existing gaming establishments in mind.
What the state failed to consider was how locating the casinos in these far-flung areas would affect visitation.
At the end of the day, a good-paying casino job isn’t too good if there aren’t enough customers to sustain it.
What happens next for the ailing properties?
The state will now have to decide if it admits its error and lessens the burden (taxes or otherwise) on the casino properties, or if it will do nothing and simply cross its fingers and hope something like legalized sports betting will be just what the doctor ordered. For the moment, at least, Gov. Andrew Cuomo and others think doing nothing is the way to go.
Some sort of bailout would cut into the amount of tax revenue the state receives but would help put the businesses on more solid footing and avoid shedding a significant number of jobs created by the casinos. The latter would likely lead to at least one of these properties closing its doors in the not too distant future, barring some sort of miracle.
However, there is also a third option.
The state could throw these casinos a lifeline by legalizing online gaming.
Online poker, something that is already on the legislative agenda in 2018, would generate some $50 million in revenue for operators, which would work out to several million dollars in tax revenue for the state.
Furthermore, if the state has the stomach for it, the legalization of online casino games via a constitutional amendment would generate exponentially more money for the casinos and for the state.