Sunday, June 1, 2014

When Tom DiNapoli Speaks, Everyone Should Listen: Low-Balling New York Casinos

Tom DiNapoli - Low-balling New York Casinos

New York State Comptroller, Thomas DiNapoli
 By all accounts Tom DiNapoli, New York State's Comptroller, is a level headed guy who has yet to be touched by any of the all too frequent scandals that have plagued New York politicos in the past few years. A loner with few visible governmental buddies, he has successfully waged campaigns against shoddy bookkeeping and lousy financial policies in institutions throughout the state. So why shouldn't we sit up and listen when he makes predictions about the eventual economic benefits of the four new casinos proposed for New York? Mostly because we don't want to hear anything bad about something we have yearned for far too long.

Here's what Tom had to say the other day about the impact of casinos on New York, a statement that was widely quoted in the New York Times and every other newspaper still around. "There will be winners and losers. The jury is still out as to what the long-term impact is and whether that might well be as positive as proponents have argued.

Although the original estimates rolled out before the casino legislation was put to a vote had revenues coming in at many hundreds of millions of dollars in addition to the $3.2 billion already there mostly from lotteries and racinos, DiNapoli suggests that as little as $200 million annually in new money will be realized at first. His rationale, worthy of consideration, is that much of the casino traffic generated by the four new casinos will come from in-state residents as opposed to luring outsiders in from neighboring states. In terms of the states economy, such activity primarily represents substitution of gambling losses for other consumer purchases (entertainment or retail sales, for example), he says, rather than net new business.

This is not the first time that Tom's proclamations differ from those of the Governor, Andrew Cuomo, and the legislative leaders. It will not be the last time either.

 The preliminary results of New Jersey's foray into online gambling this year and last should encourage all doubters to lean toward agreeing with Mr. DiNapoli. Initial projections in the many millions of dollars fell far short of even the most modest estimates and in hindsight most of the hype served to get the laws on the books and nothing else. New Jersey will now plod along with more reasonable expectations and see what happens.

In the long run casinos in New York will bring more jobs and will stimulate the economy - just not as much as expected. The state will generate more tax revenue and funnel it into the schools and other places it is needed - just not as much as expected. The message is that casinos can be part of the solution to a big problem this state and every state faces regarding revenue - it just can't be the only solution.

Tom DiNapoli is usually right and he has few, if any, allegiances to satisfy or cronies to appease. I'd listen to what he has to say.

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