Why Andrew Yang is wrong to promote casinos in NYC

Earlier this week, Democratic mayoral candidate Andrew Yang pitched a new idea for reviving tourism in New York City: a casino on Governor’s Island. “That casino would generate so much money it would be bananas,” Yang said in a radio interview. “If the city could get that in place and harness some of that – that would be one of the engines of recovery.”

Days later, news broke that casino and real estate developers are seeking to bring a new casino to Manhattan, hoping to capitalize on the density of the city and in a real estate market depressed by the coronavirus pandemic. With many corporate employees performing their work remotely, the once-lucrative commercial real estate market has been in freefall.

Though Yang had pitched a casino for Governor’s Island, he embraced gaming on the island of Manhattan too. “We need big ideas,” Yang tweeted on Thursday. “There are many downsides of casinos but the upside is $700m+ recurring annually largely from tourists now going to CT and NJ. That’s money for teachers, hospitals and other services. We should be trying to grow revenue where possible.” 

New York City is undoubtedly struggling with extremely high unemployment and tourism numbers that are a fraction of what they were before COVID-19 hit. The city will have to get creative about generating revenue and luring visitors – most economists project it will take several years, at least, for New York to return to its former glory.

So Yang is right that politicians must start thinking ambitiously and consider unorthodox ideas for creating new revenue streams, but he is wrong to choose casino gambling as a plan for economic development.

Put aside, for a moment, that there almost certainly won’t be a casino on Governor’s Island, because a federal deed explicitly bars casino construction on the island, a legacy of Rudy Giuliani’s attempt to place one there in the 1990s.

It would be a bad idea even if the deed could be altered. A 172-acre former Coast Guard facility that is only accessible by ferry, Governor’s Island has emerged as a popular destination, hosting concerts, fairs, and various get-togethers in its public parks, which enjoy striking vistas of the Manhattan skyline. The Trust for Governors Island—a city-controlled nonprofit that runs the island—is working with City Hall to make its next addition a climate-research center within 4.5 million square feet of new development.

Nor is a casino in Midtown Manhattan a cure for the literal disease that ails the city. Upstate, casinos have been an abject failure, though Gov. Andrew Cuomo has made casino legalization a centerpiece of his long-running attempts to revive poorer regions across the state. Resorts World Catskills, roughly 85 miles north of the city, has been a consistent money-loser. According to The New York Times, “all four of the state’s newest casinos have underperformed expectations,” since before the pandemic.

Part of the problem is that the casino market is oversaturated. The Northeast, and everywhere else, is increasingly rife with them. There are a finite number of gamblers. The New York City area has two racinos already – they are technically not full-fledged casinos—that compete against each other, Resorts World in Queens and Empire City in Yonkers. 

Casinos do produce revenue that helps fund schools and other public services. But if revenue is the only goal, a new tax on ultra-millionaires or billionaires can do the trick. Proponents of casinos will also claim they can spur local economies, reviving the towns and cities in which they operate.

This almost never happens. There is only one Las Vegas, a gambling mecca that long ago entered the popular consciousness. For most other cities, a casino’s success depends on what’s around it. If there are no other businesses to cannibalize – if the area is so economically-depressed, in other words, that it has little to lose – a casino can sometimes be a net-positive. But this also means that those going to gamble away their earnings are likely working-class and poor, giving away their limited resources to a wealthy, predatory entity.

What about New York City? It can be argued that we aren’t yet at a saturation point for gambling, that the tourists and gambling addicts who journey to Atlantic City or Foxwoods in Connecticut may come here instead, allowing for the creation of new tax revenue.

But a casino in Manhattan would not be any kind of serious economic development tool. Businesses in New York thrive through agglomeration – many of them being in close proximity to one another, benefitting from foot traffic, a concentrated pool of talented works, and the appeal to customers and clients of being able to enjoy the urban experience and easily comparison shop or buy complementary goods. A pizzeria, a barbershop, a pharmacy, and an antiques store can all thrive on a single block.

In Manhattan’s once-thriving office, retail, tourist and entertainment areas in Midtown and the Financial District, demand is only down because of the pandemic and won’t return until vaccination is widespread and people begin traveling again to destinations like New York. But once they do, why would a casino be much more economically productive than all the other businesses that might there?

Casinos aren’t like movie theaters, restaurants, or even big box stores. People go to gamble, eat, and drink inside the building, saving their money for whatever is on the property.

A dinner at a Manhattan restaurant can lead to a ticket for a Broadway show and a trip to an ice cream parlor later on. Casinos would capture most, if not all, of that revenue. Small businesses nearby do not necessarily benefit. It’s not as if those localities that have pinned their hopes on gambling, like Atlantic City, have been economic success stories. Check out the casinos in Detroit and Buffalo if you want to see how desolate the area surrounding an urban casino can be.

The public returns from gambling decline quickly over time, either due to oversaturation or competition from other gambling outlets. The legalization of online sports betting in New York, for example, will not benefit a theoretical Manhattan casino.

And there is the moral cost: well-heeled tourists can afford to pour some money into a casino, but locals close to poverty can’t. Gambling stimulates the brain’s reward system much like drugs and alcohol can. Economic ruination can come even faster.

New York City has plenty of tourist attractions and, until the pandemic hit, plenty of tourists. They will return when the coronavirus is beaten back. 

And if the city needs even more lures for tourists and ways to spend entertainment dollars, it can do better than casinos. If Yang wants to make Governor’s Island more of a tourist destination, he can consider museums, sculpture gardens, or food and flea markets. More marquee events could do the trick too. Midtown can be home to new museums or unique retail that can’t be found elsewhere – anything, really, but a casino.