Friday, September 26, 2014

Off to the Races: Hard to Separate the Facts from the Rhetoric – Genting Americas

The three local public meetings to introduce New York’s 16 casino proposals ended on Wednesday in Ithaca, NY after two earlier sessions in Albany and Poughkeepsie, NY. With the public and local communities now much better informed, the Gaming Facility Location Board can make its presentation to the state gaming board and we expect final licensing decisions by the end of October.

Along with facts, figures, and projections, public forums like these usually bring a lot of rhetoric especially from those pitching their concept as the biggest and best. Shrewd listeners and readers know how to separate the hyperbole from the meat and potatoes but that doesn’t stop the proponents from laying it on thick.

Case in point is Genting Americas’ Chief Financial Officer, Christian Goode. Goode attended all the local forums and spoke with local reporters throughout the state detailing the reasons why his company’s bid should be approved. Genting Americas has two proposals in the running, both in Orange County, the southern-most New York county to receive bidders. One, Resorts World Hudson Valley in rural Montgomery, NY has not gotten lots of play. The other, the Sterling Forest Resort in Tuxedo, New York, a mere 40 miles from New York City, has received the most attention of any proposal mostly because of its magnitude, a $1.5 billion complex, and secondly because of its location.

Any casino built within an hour’s drive of New York City will be seen as a game changer in the Northeast. NYC is regarded as the prime market for casinos as far away as Philadelphia and eastern Connecticut and, once upon a time, Atlantic City. With the prospect of a New Jersey casino in the northern part of the state (proposals have been flown for Jersey City and the Meadowlands) doomed to be mired in state politics, a New York City area full scale casino is looking very profitable. On that score the Tuxedo proposal is, hands down, the best business plan of the bunch. With that in mind, the Tuxedo proposal is forcing its proponents to bend the original legislative dream a bit.

 Casinos are being allowed by the NYS legislature for the specific purpose of rejuvenating otherwise economically depressed areas in various regions around the state. That and filling the state’s coffers with more tax money are the only real reasons why these laws were ever passed. There was never any thought of creating areas where NY citizens could go to have a good time. There was never any inkling of loosening up the paternal choke-hold that New York has on many of its citizens, not allowing this (gambling) and not allowing that (marijuana). The perception that NY is a progressive state is a fantasy – the price we pay for years of government intervention to take care of its citizens has made NY into a rule heavy, big brother locale. Nevertheless, the sole purpose of the casino initiative and the only one that had been touted prior to these meetings was economic rebirth, jobs, and tax money.

If you are looking to keep to this mission, Tuxedo, NY is the last place you look. Not only is this small enclave of the well-to-do not economically deprived, it has one of the highest per-capita income averages in the state and the nation ($89,895 median household income in 2012 according to!  So suddenly, creating a luxury environment for foreign gamblers has become a reason for building although that’s not what’s being said very clearly at these meetings.

What is being said, and here is where the rhetoric gets pretty deep, is that Genting Americas will create jobs, good, well-paying jobs. Unfortunately, this is not an area that needs jobs! Goode’s exact comment regarding jobs is that the resort will create more than 4,000 jobs with an average salary of $75,000.

That statement is both NOT surprising and surprising when you take it apart. Four thousand employees is not an exaggeration by any means. What Genting Americas is proposing is a full scale resort with much more than casino space and restaurants. They mean to capitalize on the outdoor, recreational value that the site already has – a ski area in winter, and old growth, protected forest land the rest of the year. We can imagine golf courses and hiking trails somewhere in the future. The Casino de Genting in Malaysia, the world’s largest casino, employs 13,000 people. More familiar enterprises in the USA have more than 4,000 employees – Foxwoods in CT has 10,000+, the MGM Grand in Las Vegas has 9,000 employees and the Borgata in Atlantic City pays 7,000 workers every week. So, the number of proposed employees for the Tuxedo Resort is in the ballpark.

The stated average salary is not; it is way, way off. I am guessing that Goode is not talking about the salaries of those who will be employed in the construction of the complex. According to US News and World Report (Article) construction salaries in major US metropolitan areas can average $90K per year with the high end reaching $125K and the low end still in the $40K range. But, those are not jobs that will last at the Tuxedo Resort. Many of those workers will come from outside the area, work for up to six months and then move on to a different construction project. If Christian Goode was referring to those kinds of jobs he’s stone-walling.

Casino jobs, historically, do not approach an average of $75K annually. Statistics reported by Work Chron for the year 2012 tell a very different story. While hotel casino salaries are higher than salaries at smaller, stand-alone casinos, none of the numbers get close to an average of $75K per annum. Casino cashiers earned an average of $25,740; dealers, an average of $22,410; security personnel were higher at $35,440; and casino supervisors and managers earned an average of $72,270 per year. In order to come up with that number a casino would need to pay everybody $75K per year or about the same number of people higher salaries in the $100K range and lower salaries in the $50K range. That’s not what happens. Businesses have a small number of higher paid executives and managers at the top and a larger number of lower salaried line workers at the bottom. 

Although not mentioned specifically in this article (click here) casino workers in Malaysia, where Genting has its largest casino, recently went on strike for higher wages. More jobs for New York, yes; higher paying jobs, no! 

Up to this point there has not been much in the press about nefarious dealings associated with any of the companies making proposals. Yet, in the best American tradition, some will seek untoward ways of getting ahead of the competition. All three public forums were full of audience attendees wearing various brightly colored tee-shirts with their message of choice emblazoned across their chests. Many, most, were in favor of one proposal or another. Some were against proposals on moral, ethical or financial grounds. Allegations surfaced of proponents being paid for their participation, bussed in and fed free meals. All of that is probably true. As long as everyone has a fair chance to win influence any way they can, who are we to judge. Thus far there have been no allegations of high level pay offs and corruption on the legislative end. Let’s hope it stays that way.

More on this in a month or two!

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