Report: Casinos ‘Not A Sure Bet’ For Tax Revenue
New York’s casinos are not a sure bet to drum up tax revenue for the state and local governments, according to a new report, which comes as the state considers adding several new gambling facilities.
The report by state Comptroller Tom DiNapoli found that the state’s four licensed casinos brought $176 million in gaming tax revenue from 2017 to 2022 for host and regional local governments, but only the three smaller towns that host casinos had significant fiscal benefits.
DiNapoli said the report is intended to provide a “clearer perspective” that can help potential casino host communities “avoid the pitfalls that arise with misguided expectations about the public benefits of casinos.”
“Casinos are not a magic fix that will solve local fiscal challenges,” he said in a statement. “While casinos have generated local gaming tax revenue, the impacts vary for the communities that receive such revenues. They are not a sure bet.”
DiNapoli said the pandemic contributed to revenue shortfalls, with casinos shut down for six months in 2020 followed by capacity restrictions that were not fully lifted until June 2021.
But all four casinos had gross gaming revenues exceed prepandemic levels in 2022.
The report points out that didn’t translate into greater local gaming taxes, however, because state amendments to New York’s gaming law allowed casinos to keep a greater percentage of their gross revenue.
A 2020 report by DiNapoli’s office found that all four casinos – del Lago Resort and Casino, Rivers Casino and Resort, Resorts World Catskills, and Tioga Downs Casino – had fallen well short of the projected gross revenues on which local taxes are levied.
Three years later, revenues and tax contributions continue to lag expectations reaching only 50% to 60% of initial expectations, he said.
In 2013, New York voters approved a referendum to allow up to seven private casino licenses and a year later the state Legislature approved a law that allowed four upstate casinos.
With a moratorium on new casinos lifted this year, Las Vegas-based companies and real estate developers are vying for up to three casino licenses for the downstate region, including New York City, that could be awarded by the state’s gaming commission in coming months.
A 2021 study commissioned by state gaming authorities found potential gaming revenue in New York City could reach more than $5.3 billion annually.
But DiNapoli said cities and towns that are vying to build casinos should consider adopting long-term planning strategies and reserve policies to help them “manage the risk of a disruption of gaming taxes.”
“COVID-19 shutdowns were a temporary and extreme example of such a disruption,” he wrote in the report, “but as this report demonstrated, economic factors and State policies can also reduce local revenue unexpectedly.”