Casino Gaming in Buffalo: Bad Odds?
Most everyone has an opinion on the proposed Seneca Buffalo Creek casino. Many opponents base their beliefs on social impacts or moral issues while proponents point to nearby casinos and say, “too late.” Others look at it from an economic development perspective. New jobs and more money into the region make a casino a no-brainer, right? Not so fast says a story in Tuesday’s Wall Street Journal .
Bad Odds As more states look to win the economic jackpot with casinos, evidence suggests they are playing a losing hand
Out on the Great Plains, an experiment is under way: Under a new state law legalizing gambling, Kansas City, Kan., could soon be lit up by the first full-blown casino resort in its 135-year history.
If the plans come to fruition, Kansas will be the 13th U.S. state to bet that commercial casinos will prove to be a win-win game, reaping profits for the casino owners and boosting development for their hosts at the same time. "We'll see a big economic benefit," Kansas Gov. Kathleen Sebelius said when she signed the enabling legislation in April.
A growing body of research and experience, however, suggests the odds are not stacked in the state's favor. Some economists go so far as to call casinos a sort of global zero-sum game, in which the outcome for a host city depends on the casino's ability to attract out-of-state tourists and separate them from their money -- a feat that becomes increasingly hard to achieve as more states install casinos of their own.
"There are two simple questions: Where does the money come from, and where does the money go?" says William Thomson, a professor of public administration at the University of Nevada in Las Vegas. "If the customers live in the local area, there's no way you can have economic development."
Continuing...
More blackjack dealers and gaming taxes, though, don't necessarily add up to growth in economic well-being. For one, casinos often take business from other entertainment venues, such as theaters or sports bars. As a result, some economists -- such as Earl Grinols, a former senior economist on the president's Council of Economic Advisers who now teaches at Baylor University in Texas -- contend that, on average, casinos actually make no net tax contribution. The effect on jobs could actually be negative, because many modern casinos -- replete with slots and video-poker machines -- need fewer employees per customer than the businesses they tend to replace.
"The problem with cities is that they only look at the positive side," says Ricardo Gazel, who is an economist at the Washington, D.C.-based Inter-American Development Bank, and who authored a paper on casinos and economic development while at the Federal Reserve Bank of Kansas City. "They look at revenues and the creation of jobs, but they don't look at the destruction of other jobs."
A few communities, such as Las Vegas, and to a lesser extent smaller gambling centers like Biloxi, Miss., come out ahead because they also are successful as tourist destinations, drawing most of their gamblers from afar. That keeps the benefits at home and distributes the costs elsewhere, because people take their losses and problems back to the places from whence they came. "Because they're drawing such huge volumes of money from other areas, you can argue that's enough to outweigh the local negatives," says Prof. Grinols. "You're imposing the social costs on some other place."
But with more and more places trying to become the next Las Vegas, the greater competition lowers the chances that any will succeed. A city aiming to install a casino "is very unlikely to become anything more than a regional player, and its major customers are likely to become its own residents," says Bill Eadington, a professor of economics at the University of Nevada in Reno.
The pitfalls are evident in places like Gary, Ind., and Detroit, which both introduced casino gambling in the hopes of stimulating moribund local economies. The three casinos in Detroit, built in part to compete with casinos across the border in Canada, cater largely to a local clientele, says Fred Wacker, an avid gambler and professor of interdisciplinary studies at Wayne State University in the city. Revenue from the three casinos has grown steadily, and they contributed about $158 million in gaming taxes to the state budget in 2006. But Prof. Wacker, who initially favored bringing in casinos, sees little positive impact on the area.
"Casinos always make money, but how much good they're doing for Detroit's economy is another question completely," he says. "I don't see much community development."
The full story is available free until Monday here.
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Comment Options
Keith
Let's treat the Seneca casino like a person who gambles; do it once then quit while you are ahead. Put another way, let the casino stand but from now on do other things to build the economy. Hopefully, the casino will just be one among many entertainment options in the future.
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bjfan82
There are a lot of good arguments on all sides of the debate, however, I'm more optimistic about positive impact from a casino in Buffalo or Niagara Falls than I would be for Detroit or Kansas City, KS. Our region is much bigger tourist destination than Detroit and Kansas City are not, so we'd be drawing a lot more outside money. I say give the Senecas a chance, and who knows maybe (hopefully) all the negative impacts people keep speculating about won't come to fruition.
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tudorguy
Where are we on the "build or not build" the bigger casino? Much like the bridge, traffic on Main Street, etc. it seems like it's a non-issue (again). Does anyone know if there's movement to build the larger casino (and for that matter - what's going on with traffic on Main Street)?
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honda88
How many casinos do we need is this area? It's already saturated with 3 by the falls and all the slots in various lolcations. We have to think like a region, but we're just competing against one another yet again. Plus every city around the country is banking on casinos as in influx of outside dollars which clearly in showing much benefit. Las Vegas in the only city on the World that is successful at this.
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AdamFIx
Hasn't it already been established that it would be marketed as a regional attraction and not as a national destination? Also, I'd like to see a breakdown of the percentages of the agreement- how much of the profits are going to the state, and how much to the local governments? It just seems like it'll be sucking money from the area and sending it downstate and into the Seneca's pockets- I can't see many economic benefits to our city, long-term.
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georgethomasapfel
Las Vegas’ success has come not only from gaming but other industries which have been lured here. Tourism and gaming, while being the state’s biggest industry, is not the only game in town. During lean years like recessions and the late 70’s energy crisis (remember the long lines at the gas stations?) Las Vegas’ economy suffered. Plus as other areas legalize gaming there is increased competition for those tourism dollars. There were many layoffs here during the slowdowns and the city and state sought out and lured other industries here to diversify its economic base. The lesson to be learned here is that it takes more than gaming alone to help ensure prosperity.
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MisterChips
AdamFlx is dead on. The Senecas themselves declared in their filings for the federal government that this casino is intended to "serve" (if that is not an evil euphemism, I don't know what is) the local area.
Funny, when local people, like the underappreciated Joel Rose, raise the economic argument against casinos, they're denounced as obstructionists and moralistic killjoys. Now when the Wall Street Journal raises the economic argument against casinos, funny how no one on BRO gripes that WSJ is moralistic or obstructionist .
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Klaatu
I find it interesting that you're telling them what they can and can't do with land that was originally theirs. Yes that's right you @#$%$# imigrants. Then you have the nerve to tell other groups, particuarly the Mexicans that they can't come to this land. If it was OK for Europeans to come here against the will of the native people, why isn't it OK for the Mexicans to come here against the will of the current American people?
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MRodgers
Klaatu, altough I agree with some of what you wrote, remember that Klaatu/Carpenter was a being of peace, please don't smear his character by using aggressive speech.
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Emjay
I don't think it's any coincidence that one of the world's most successful casinos in Monte Carlo, Monaco outlaws citizens of Monaco from gambling in the casino. Keep in mind that this principality is completely tax free and operates its small government entirely from the proceeds of the casino. They recognize that taking money from their own citizenry does nothing good for the local economy. If Monaco, one of the richest places in the world is afraid of letting its insanely wealthy citizens lose some of their money to the casino, how worried should a troubled economic region like Buffalo be?
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chris69
THE INDIANS LOST ALL RIGHTS TO THEIR LAND UPON CREATION OF THE UNITED STATES PERIOD!
INDIANS ARE CITIZENS...THEY CAN BE DRAFTED AND THEIR LAND CONFISCATED BY THE FEDERAL GOVERNMENT
THE FEDERAL GOVERNMENT HAS JURISDICTION AND CONTROL AND CAN TAKE IT ANY TIME THEY CHOOSE AND TO A CERTAIN EXTENT...THE STATES HAVE SIMILAR EMMINENT DOMAIN AND TAXATION RIGHTS.
SO KLATU, YOU COULD HAVE ASSIMILATED INTO THE UNITED STATES BUT IT WAS YOUR PEOPLE THAT PREFERRED RESERVATIONS....FINE...BUT YOU STILL HAVE TO PAY TAXES!
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sally
The Niagara Falls Casino has already been proven a success. There are 5,000 more people employed in Niagara County now than their were 15 years ago. 104,000 vs 99,000 according to the latest stats that I have seen. Niagara Falls itself while still very deprtessed has seen hundresds of millions of dollars spent on construction bty the Seneca's with two more major hotels on the way. Because of the Casino the NFNY skyline has seen it's first addition since the 1920's. There is now at last a reason to go to NFNY other than the water itself. It is not the fault of the Seneca's if other local developers to not take advantage of the traffic generated by the Casino. Don't blame the Casino if developers like Benderson and Ciminelli are too blind to see the millions of people brought to downtown NFNY year, don't blame the casion for the lack of fpresight by our private developers to make investments. Other places would kill to have the type of traffic that NFNY has yet our non Indian developers have totally dropped the ball and left that market unserved. Shame on them not on the Casino. The Seneca's cannot turn the region around all by themselves.
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vavoom
Chris69, did you fail your history class? The American Indians did not choose to live on reservations. Did you ever hear of the Indian Removal Act of 1830. The forced death marches referred to as the 'Trail of Tears'. Nearly all relocations under the act were carried out under duress either under military escort or when no other options remained thru tribal decimation.
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JohnMarko
I'm Buffalo born, live in Las Vegas now.
I'm a architect in a firm that does mainly large mega casinos in Vegas, around the country, and the rest of the world.
The casino for Buffalo is a bad idea - because the City won't get to keep the revenue taxes as in Las Vegas or other cities - even Detroit - the Seneca Nation will, with Albany getting the rest and Buffalo getting a pittance at best.
Any local business will have to compete with the Seneca's non-taxes on all items.
Buffalo is not even the national draw of Niagara Falls with it's similar taxing situation.
But Buffalo will have the costs of addiction, crime, added traffic, etc.
Las Vegas prospers because it gets the lions share of the taxes and benifit. Period.
Buffalo will not. Ever.
In ten years, just as in Niagara Falls, it will be a disaster for local competing businesses.
Not. A. Smart. Choice.
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Chief_Psychic
CHRIS69 - YOU ARE A RACIST JACKASS! YOUR OPINION IS IGNORANT AND FLAWED... I CAN SEE WHY YOU WANT BUFFALO TO RETURN THE 1880s.
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SLEEPL8
Klaatu...My great great grandparents came here from Europe. I did not. As generations pass a greater percentage of US citizens are people who were born here. Granted Europeans did take this land by force...at this point it would be equally unfair to take this land from those of us born here as it was to take the land from the natives hundreds of years ago. I never stole land from anyone. If you were born on this land then this land is yours. I am as American as you and anyone else born on this soil. The USA is ours, as much yours as it is mine and vice versa. If we wish to refuse Mexican's entry then it is our perogative to do so because this our country and not theirs. Yes we took this land by force but that has been the case in all lands throughout the history of mankind. There is not point in bickering further over who owns what. It is what it is and we have what have and we need to move forward.
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Hospitable
Racist.... doubtful.. this country is full of racism, there was a time when Irish, Polish, Asian, etc.. we're all looked down upon and denied entry into the United States. Where are all you ppl complaining about taking land from the native americans... we took land from the Mexicans.. and the French took it from the Dutch... and then from the British...come on !!! Manifest destiny, as far as " being soverign".. thats a load of crap, Aside from their tax evading practices they're just like the rest of us.... drafted.. same federal laws.. etc. Just b/c your Indian means you don't have to pay taxes.. .give me a break.... god that is soo fricken ridicolous.. they have it easy..
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sbrof
the only hope that this would have a positive impact on Buffalo and WNY is if the money came to Buffalo. The fact the money is just leaving to the Res or Albany means you might as well just go and dump the money in the river and watch it float away cause it wont be helping out economy! yes those 1000 jobs are nice but you can be guaranteed more money will be LEAVING this area then staying.
And when money leaves businesses close, and people leave.
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llrain
Ummm all land was taken by force at some point or another.. that's the history of the globe.. why do Native Americans deserve special rights, they lost the war (or series of battles as it were) To the victor go the spoils...
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AtwaterLouse
Sbrof, what a strange and bogus complaint. Let's consider a few alternative entertainment choices.
Do you support having movie theatres in Buffalo?
Or do you feel these are bad to have in Buffalo because except for some usher and ticket seller pay checks, the "vast majority" of movie ticket revenues leave our area? It goes to the Regal Corp, the movie distributors, production companies, actors, etc. Is it bad for Buffalonians to have access to movie theatres? Why is THAT not the equivalent of dumping money in the river? Huh????
What about renting DVDs at Blockbuster or NetFlix? Do not the "vast majority" of those rental fees leave our area, headed to the corporation and other destinations similar to movie theatres? Is it bad for Buffalonians to rent DVDs? Should we stop that? Also dumping money in the river?
How about cable TV? Is it bad for Buffalonians to have cable TV available to us because except for some telemarketers and installers, the "vast majority" of subscription revenues leave our area? It goes to Time Warner Corp, the cable networks, production companies, actors, etc. Is it bad for Buffalonians to subscribe to cable? Should we stop?
How about big concerts? Is it bad for Buffalo when these come here because except for the venue rental and some security crew, the "vast majority" of ticket revenues leave our area? Where's the protests of these?
Many other examples abound, not just entertainment.
Many on this site would practically wet themselves if "cool/trendy" retailers such as Ikea or Trader Joes would honor us with a store here. Guess where the "vast majority" of money spent at those stores would go? It would LEAVE OUR AREA - that's where it would go! Oh the horror! It's just like dumping money in the river!
This concept is called trade. People have the opportunity to voluntarily exchange amounts their money in return for goods or services, where one example kind of service is entertainment, and examples of entertainment can include going to movies, renting DVDs, attending concerts, or even a gambling casino.
The moral argument of addiction is a separate matter, but it's very similar to beer and liquor sales - a trade-off choice between a nanny state and individual liberty. The argument against special rights for tribes is very strong, and on that we might agree. Personally, I favor full legalization of casinos with appropriate zoning such as for strip clubs. Let adults make their own decisions. But the argument from sbrof and others is very lame to say it will be a terrible problem that revenues from this one particular form of expenditure leaving the area when they have no such complaint about movies, DVDs, cable TV, concerts, Ikea, etc.
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