roulette-photo-5455095By wrapping up a gambling agreement with the Saint Regis Mohawk Tribe this week, Governor Cuomo moved another step closer to implementing his “resort gaming destination plan,” which he says can “supercharge” economic development. Upstate communities surely need jobs and added revenue, two things that new resort casinos can indisputably deliver. However, based on research in the field, it’s by no means clear that expanded gambling will provide the unalloyed jolt the Governor is banking on.

Some industry-sponsored studies say that about two-thirds of a casino’s spending in the economy occurs in host and surrounding counties. Similarly, the Governor’s press release touts the $2.3 billion New Jersey casinos spend annually with over 2,000 state vendors.

But aside from concerns over the social costs of expanded legalized gambling, at least some of the cash collected by casino operators will come at the expense of other firms.  For example, economist Earl J. Grinols of Baylor University has suggested that for every $1,000 in casino revenue, businesses up to 30 miles away lose $243.

Similarly, in a 2010 report on the Pennsylvania gaming market, a Federal Reserve Bank of Philadelphia visiting scholar advised that a casino’s positive local economic effects are be offset by a “displacement” of local business activity, where money that would otherwise be spent in other establishments is now spent at the casino.

The old adage “there’s no such thing as a free lunch” comes to mind. While upstate communities are rightly fascinated with the possibility of jobs and revenue, these studies and many others should compel a healthy amount of suspicion about what a casino means for their community. At least in that way, New Yorkers will not be surprised if their community’s new resort casino doesn’t meet their Vegas-sized expectations.

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