Gov. Andrew Cuomo has said that his proposal to allow up to three casinos in upstate New York will “create thousands of new jobs where they are needed most.”

Now comes the small print: it turns out those jobs will be controlled mainly by the state’s politically powerful labor unions, whose support the governor presumably is courting for the constitutional amendment that voters will be asked to approve this fall to legalize casino gambling on a broader scale.

Under the bill Cuomo unveiled last week, each casino will be required to enter into a “labor peace agreement” with unions seeking to represent their workers – which explains why the head of the state AFL-CIO was present for the governor’s announcement of the plan in May.

But that’s not all: in an unprecedented move, Cuomo’s bill would also treat all capital projects at casino sites as “public work” under the state labor law. The privately financed, owned and operated facilities would be covered by prevailing wage requirements and would have to submit union-friendly project-labor agreements for renovations and construction work.

More than almost any other industry, the heavily taxed, heavily regulated casino business creates more back-scratching opportunities for politicians.

The inevitable result: higher costs for the casino owners (who will, to be sure, just pass them along to bettors) and fewer job opportunities for the region’s construction workers and contractors, who are overwhelmingly non-unionized.

Brian Sampson of the business group Unshackle Upstate calls this “a complete overstep by the governor.” That’s almost an understatement. As the non-union Associated Builders & Contractors (ABC) pointed out, passage of the governor’s bill also would, among other things, “effectively open the door to mandating prevailing wages on virtually all private work where a state license is required to operate.”

Licensed or not, very little major private development now occurs in much of upstate New York without some form of government concession or assistance, creating a wide field of other potential opportunities for the unions, based on the casino precedent. Current state law already requires labor peace agreements on hotel projects that get public authority financing, and unions have been pushing legislation that would expand prevailing wage requirements on all private projects and facilities financed through Industrial Development Authorities. Cuomo’s gaming bill would give labor lobbyists yet another precedent to cite.

In typical rushed fashion, the Legislature is poised to pass some form of gambling bill without carefully considering the pros and cons of the social costs generated by casinos (increased personal bankruptcies, for example) or the true extent of the economic impacts.

Putting those issues aside, the governor’s labor-friendly bill language reflects a fundamental problem with the standard approach to legalized gambling across the country. More than almost any other industry, the heavily taxed, heavily regulated casino business creates more back-scratching opportunities for politicians and special interest groups-the last thing New York needs.

It’s not hard to guess where the Assembly’s Democratic majority will stand on these provisions during negotiations on the casino bill. Still lingering is the question of whether Senate Republicans, self-styled champions of deregulation, will insist that casinos be treated the same as any private development.

With the Legislature due to adjourn next week, we’ll know soon enough.

About the Author

E.J. McMahon

Edmund J. McMahon is a senior fellow at the Empire Center.

Read more by E.J. McMahon

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