development pros and cons of siting a resort casino in Saratoga Springs, NY
are all the rage in the Northeast these days.
New York State is siting four new full-scale resort casinos, and
Massachusetts is siting a further three.
This is in addition to those in Connecticut and New Jersey, as well as
the existing casinos sited on tribal lands and various other forms of gambling
(slot machines and off-track betting parlors).
Camoin Associates has been busy in this domain, serving in support of
one casino in the Catskills and in opposition to one in western Massachusetts
(our report on the latter can be found here). What we have found, in general, is that the
arguments for and against casinos can be heavily influenced by the perspective
of the speaker—particularly with respect to being the host community versus a
surrounding community. In general, the
host community seems to get a windfall both economically and in terms of tax
revenue. Surrounding communities may get
some benefits, but may be adversely affected by loss of business, congestion,
and other effects.
of the new casinos in New York is slated to locate in Saratoga Springs,
headquarters for Camoin Associates. As a
resident of Saratoga Springs, this is an especially important topic to me, and
various proponents and opponents of the casino have asked on a number of
occasions what my perspective is. Unfortunately,
there is no clear-cut answer to provide them, but there are a number of strong
arguments that may be getting short shrift in the public discourse. So, below are some of the possible pros and
cons from an economic development point of view as well as some brief
conclusions. Many of the arguments cut
both ways, there being both potential benefits and costs associated with the
proposal as shown below. Feel free to
review the topics below or just cut down to “Conclusions” for some blatant
editorializing from yours truly.
reiterate, these topics are all selected and discussed from the point of view
of economic development. There are
plenty of other perspectives to bring to bear on the topic, but we will save
those for other experts.
Tourism Destination – Pro: Protecting Critical Mass and
Existing Assets. Currently, Saratoga
Springs is a small town that punches way above its weight with respect to arts,
entertainment, culture, and amenities.
Why? Because each year, thousands of wealthy thoroughbred racing fans
come into town with bags of money. But,
wait, there is also a “racino” – New York’s special hybrid combination of
harness-track racing (not thoroughbreds) and slot machine operations. Make no mistake, the slots are the economic
driver of the two, by a vast margin. In
fact, having worked on a few studies related to racinos, I can say definitively
that, without slots, the harness track would immediately go out of
business. The math is dead simple –
slots generate the lion’s share of the purse money for the harness track
races. (Yes, you read that right, the
betting on the horse races itself is basically a money loser for the on-site
operations of the race track, absent the slot revenue.) Loss of the harness racing would have
multifold implications for not only the immediate business of horseracing
itself, but all the farms and agriculture-related production and business that
occurs around the racing. It is not a
small number! If the new casino is
located else somewhere in the Capital District, outside of Saratoga, it is
unlikely that the existing Saratoga racino could survive the experience. So, there is a strong argument to make that
getting a full-scale casino is essential to maintaining a whole industry for
However, there is a
second aspect of this—remember the thoroughbreds? Thoroughbred racing is the better known and
more “respected” of the two, and it undoubtedly brings in people from a much
larger radius and of a certain caliber.
(Did you know the Prince of Dubai makes an annual visit?) Together with the existing casino and a host
of other draws, Saratoga is known as a tourist destination. That reputation is essential to keep the good
times rolling—and not downhill! Each
element is a brick of the tourism destination edifice that is Saratoga. Losing one brick while also being faced with
an extremely well-heeled and visible competitor (i.e. the new casino, should it
locate elsewhere in the area) could bring a set of self-reinforcing and negative
forces to bear on the city.
Tourism Destination – Con: Protection of Image &
Cache. Saratoga’s tourism
destination image is decidedly high-end as described more fully above. The current racino, while important
economically, is very much hidden from view and operating in the
background. Saratoga is known for its
restaurants and nightlife, being the summer residence of the New York City Ballet
and other such niceties. The new casino
could overshadow (both literally and figuratively) that image, as it is slated
to be a “full-scale resort casino” with a very large hotel tower visible from
all angles, with signage and constant marketing, etc. Would the general public cease to associate
the genteel image of thoroughbreds with Saratoga and instead think about a
A second element of
this image discussion has to do with residents as much as tourists. The city is home to many of the highly paid
tech workers at the nearby GlobalFoundries “chip-fab” (think computers, not
Doritos), people who could locate virtually anywhere in the region. Why do they choose Saratoga? In part because it has the cachet of a
family-friendly town with all the amenities that tourists enjoy available to
the locals year-round. As I have often
said, Saratoga is a city of 30,000 that has the culture of a city four times
that size. People want to be here, and
that propels a kind of virtuous, self-reinforcing cycle. Property values are high, incomes are ample,
businesses are healthy, schools are good (in part because of ample tax revenue),
and so on. Would this virtuous cycle survive if the city were rebranded into a
Social Justice – Pro: Jobs for the Masses. The above is a great
lead-in to this section: the flip side of Saratoga being a sought-after
location is that Saratoga is a tough place to live on a modest income. Like it or not, the racino provides hundreds
of relatively high-paying jobs to residents who may have obtained only a
high-school education. (See my series of
articles on the workforce paradox of GlobalFoundries, which covers this
topic of low-skilled jobs versus middle-skilled jobs). Saratoga has some public transportation, but
it is limited. So, adding the costs of
high rent and the cost of private transportation for all but the most local
jobs is a recipe for not making ends meet at a $10-per-hour job. Again, while one might not be comfortable
with the racino for other reasons, it is a significant source of above-average
wages for non-skilled workers. If the
racino falls, where are those people going to find jobs without a 30% pay cut?
Social Justice – Con: Encouraging Destructive Spending. This argument needs
almost no introduction or explanation.
But, for those who are not familiar with slot machine operations or
casinos in general, they are not bastions of economic purity. Some have rightly called them a “self-imposed
tax on the innumerate”, or perhaps even predatory. The target demographic is not the Las Vegas
high roller, but rather the middle- or low-income set. So, in this economic-development-focused
analysis, we will just leave it at this: the money pouring into the casino(s)
could serve higher economic purposes if redirected to something with better
Main Street – Pro: Visitor Economic Spillovers. Keeping
it simple here again—more people coming into Saratoga is a good thing. Maybe only a fraction will visit Broadway
(a.k.a. the “Main Street” of Saratoga).
But, they will spend, and that spending will support the city’s
businesses. More importantly, however,
and overlooked by the vast majority of commentators are the indirect benefits
of the casino. This means to say that
the jobs supported by the casino (and harness track, by extension, as explained
above) produce significant wage income.
That wage income is spent to a large extent locally. This disposable income knows no casino walls
and flows steadily into the local economy.
Inevitably, a portion of this spillover gets to Broadway.
Main Street – Con: The Maelstrom Effect. A full-scale casino
will offer hotel rooms and meeting space that may compete with the highly
successful downtown convention center.
The casino would have a hugely unfair advantage of cross-subsidization,
providing below-cost entertainment, venues, and/or lodging that the city-center
facility could never compete against. I
have no special insight into whether this would occur (i.e. closure of the
city-center facility if the casino is built), but it would have a significant
and negative impact.
Municipal Fiscal Impact – Pro. Sales tax,
anyone? The city collects its own and
would likely enjoy a substantial windfall.
The casino would also throw off a significant amount of property tax or
equivalent. I suspect, but do not know,
that there would also be a “local benefit” agreement, which is nice-speak for
the host community shaking down the casino.
Municipal Fiscal Impact – Con. Would there be
additional costs for police protection, fire protection, ambulance, EMT or
I personally abhor casinos (and that is not too strong a word), the region is
almost certainly going to host one.
There are some very good economic arguments that, if a casino is coming,
you want it in your community! You can
read our Northampton impact report (our opposition piece to the Springfield, MA,
casino) to understand the magnitude of this effect. On the other hand, I would
not want the casino to detract from the family-friendly atmosphere or
negatively affect the perception that Saratoga Springs is a “high-end”
destination—and I certainly do not want the Atlantic City feel!
careful what you wish for! And that cuts
both ways for both the casino proponents and detractors. The question is not: “Will a casino be sited
in the Capital District?” That appears
to be a foregone conclusion. The
question is: “Do we want the Capital District casino to be located in Saratoga?”
best answer I can come up with is this: “Yes, provided that the City can
influence the development proposal to mitigate the negatives.” (I cringe in writing this.) How could they do so?
a reasonable limit on the height of the tower.
signage restrictions to make them blend a bit better with the Saratoga feel.
host community benefits agreement that uses proceeds for marketing of the city
to the non-casino crowd.
to mitigate the potential adverse impact of the casino on the downtown city-center
conference facility—perhaps limiting non-gaming gathering spaces at the casino
to auditoriums (as opposed to meeting halls and banquet facilities).
What else can be done?
send me your thoughts at firstname.lastname@example.org. However, kindly direct any hate mail to my
colleagues, who will be happy to respond.