New York’s Bad Bet

New York’s Bad Bet
By PAUL DAVIES

THE governor of New York, Andrew M. Cuomo, is sending his state down the same wrongheaded path as other states that are trying to gamble their way out of economic trouble by legalizing commercial casinos.

The casinos might create jobs and generate revenue for state coffers, but those gains would come at a cost that casino supporters ignore or play down. Various studies, including research by the economist Earl L. Grinols at Baylor University, have shown that casinos produce little to no economic spinoff and in fact divert spending away from surrounding businesses like restaurants, movie theaters and live entertainment. In the worst cases, some problem gamblers spend money that is needed for groceries, rent or child support.

More broadly, casinos are nothing more than a regressive tax that extracts wealth from the very citizens who can least afford it. The details of Governor Cuomo’s plan — which requires changing the State Constitution — remain largely under wraps but will likely follow the blueprints of other states that have allowed casinos at select locations.

While those casinos are billed as “destination resorts,” they are really convenience casinos — typically the size of a big-box retailer — that rely mainly on repeat gamblers who live in the area. Many are located in rural and working-class towns and cities that cater mainly to low rollers, not James Bond-type jet-setters.

A casino in downtown Cleveland is opening this year in a former department store. Steve Wynn wants to build a “low rise” casino in Foxborough, Mass., near a shopping center and the New England Patriots’ football stadium. The Sands opened a casino in Pennsylvania in 2009 on the site of a Bethlehem Steel plant.

Florida, Illinois, Kentucky and Maine are among the states considering similar moves to raise revenue. It is all part of a broader gambling expansion that includes efforts to legalize Internet gambling at the federal level and in several states. New Jersey wants to legalize sports betting.

Thirty years ago, Las Vegas and Atlantic City were the only legal casino destinations in the country. But over the last few decades there has been a steady increase in lottery offerings, riverboat casinos and gambling on Indian reservations. Today, 41 states have some form of casino gambling, and all but 7 have a lottery.

Governor Cuomo is correct that New York — which has a state lottery, casinos on Indian reservations and video lottery terminals at the Aqueduct Racetrack — is already in the gambling business. Many New Yorkers also travel to Atlantic City, Pennsylvania and Connecticut to gamble. But making gambling even more convenient to residents is not the answer to the state’s budget or unemployment woes. Lawmakers are sworn to protect residents, not make it easier for them to lose money.

The economist Paul A. Samuelson described gambling as the “sterile transfer of money or goods between individuals, creating no new money or goods.” Warren E. Buffett called gambling a “tax on ignorance.” Governor Cuomo’s father, Mario, himself a former governor, understood the negative impact. “There is a respectable body of economic thought that holds that casino gambling is actually economically regressive to a state and a community,” he wrote in a 1994 book, “The New York Idea.”

Indeed, studies show that where casinos are established there is often an increase in crime, bankruptcy, divorce and suicide. A study last year by the University of Maryland, Baltimore County found that one in every 30 state residents had a gambling problem. Those most at risk for developing gambling addictions are single men between the ages of 18 and 29, either African-American or Latino, with less education and income than the overall population.

For New Yorkers, opening casinos closer to home would create new gamblers and prompt many residents to gamble more often, especially low rollers who are more likely to get hooked on slot machines. That has been the case in Pennsylvania, which legalized slots in 2004.

At the Parx Casino in Bensalem, Pa., many gamblers come in an average of three to four times a week — or roughly 150 to 200 times a year, David Jonas, the former president and the chief operating officer of the casino, said at a gambling conference in 2010.

Over all, the number of calls to Pennsylvania’s problem gambling help line jumped by 26 percent in the first quarter of last year, according to the Pennsylvania Council on Compulsive Gambling.

New York can expect the same payoff from its bad bet.

Paul Davies, a journalist and a fellow at the Institute for American Values, edits an anti-gambling blog.