Casinos in Erie County

presented to League of Woman Voters of Buffalo/Niagara

meeting at the Scotch 'n Sirloin, Amherst, New York

November 21, 2003, by Joel S. Rose

 

Members of the League of Women Voters, good afternoon.  My name is Joel Rose, and I am co-Chairperson of Citizens Against Casino Gambling in Erie County.  As a long-term admirer of the work of the League, I appreciate the opportunity to address you here today.

 

Most of us who make our homes here love this area.  Surely you all do; otherwise you wouldn't be participating in this kind of event.  But as you know, we have a great number of problems here in Erie County.  I want to focus today on just one of those problems -- state-sponsored casino gambling.  I am particularly concerned about the prospect of a gambling casino in Buffalo or elsewhere in Erie County, but this is an issue that concerns the entire state, and for that matter the entire country.  This is not something that has just happened to us; this is something we New Yorkers, and we Americans, have done to ourselves.

 

Let's take a close look at casino gambling, beginning with its impact on the economy of the host community.

 

Gambling is an ancient phenomenon, but its current scope in the United States is a very recent development.  Within a single generation, an activity that was legal only in Nevada has spread to every state except Utah and Hawaii.  Annual gambling losses of Americans climbed from around $1.2 billion in 1974, to approximately $40 billion by 1995.[1]  Today, those losses are on the order of $80 billion.  So this activity has become a major part of our economy.

 

So-called "gaming" revenue is now viewed as a painless and voluntary substitute for taxation.  But this revenue begins its journey to the state coffers as real money, coming from real people who miss it when it’s gone, and the impact on the economy is actually worse than the impact of the taxes that would have been required to raise the same revenue.  Because the poor gamble proportionately more than other segments of the population, gaming revenue is effectively a regressive tax that penalizes most those who can least afford it.  Moreover, with the losses concentrated among those with the highest marginal propensity to spend, the multiplier effects are maximized.

 

The promoters of casino gambling typically promise that it will stimulate economic activity.  However, casino gambling does exactly the opposite; it concentrates money into fewer hands, by diverting the gambling losses of many people into the profits of relatively few people -- casino owners, developers, investors, and their financiers, with some revenue accruing to the state and/or local governments.  Casino gambling does bring a certain number of jobs to an area, but the stimulative effect of those jobs is more than offset by the net flow of money out of the host community.  Thus, the overall impact of a new gambling casino has consistently been to depress economic activity.

 

Let's look at the same question empirically.  Atlantic City is instructive because of its long history of casino gambling.  Within ten years of the initial opening of a casino in Atlantic City, 40% of the restaurants had closed.  Within twenty years, 90% of the businesses closest to the casinos had ceased to exist.  The one type of business that thrived was pawnshops.  The same disappointing pattern has been observed virtually wherever in America casino gambling has been adopted as an economic development tool.

 

This negative economic impact occurs even in the presence of other nearby casinos, perhaps just across the border in another state or province.  Just such a circumstance was anticipated last year in Omaha, where three casinos were already located just across the state line in Iowa.  An economic study projected that an additional casino in Omaha would result in the net annual loss from casino gambling to the local economy climbing from $98 million to $160 million.[2]

 

The promoters of casino gambling invariably promise jobs, and in fact they do deliver some jobs.  What they never tell you is that because of the depressing effect on other economic activity, gambling casinos typically destroy two or three jobs for every job gained.

 

If the purveyors of this something-for-nothing scheme were subject to truth in advertising, they would never get their foot in the door in any community in America.

 

So much for economics.  What about the social impact of casino gambling?

 

A new gambling casino means more people will become addicted to gambling.  On the average, when a casino is built, the rate of pathological gambling doubles within a fifty-mile radius.  Given a national baseline prevalence for pathological gamblers of anywhere from 1.5% to 3% of the adult population,[3] a new casino in the Buffalo area, for example, could conservatively be expected to create something on the order of 10,000 to 20,000 new pathological gamblers in the metropolitan area, along with two or three times that many new problem gamblers.  That translates into thousands of additional instances of social problems such as alcoholism, crime of all sorts including child abuse and spousal abuse, bankruptcy, depression, and suicide.

 

This prediction may seem counter-intuitive for those who believe that people who are inclined to gamble will find a way to do so whether a new casino is built or not.  That belief, after all, is certainly not inherently unreasonable.  But it just happens to be at odds with all available evidence.  Certainly it is true that some people will find a way to gamble, with or without a new casino.  But countless others will either begin to gamble for the first time, or will gamble more, whenever a new casino becomes available.

 

This is an important point, because it undermines what would otherwise be a very strong argument in favor of opening gambling casinos in Buffalo and in other cities in similar circumstances.  That argument goes something like this:  Yes, gambling is problematic, but we’ve already got those problems because of (some other form of gambling available just across the border).  People who want to gamble will gamble anyway.  So we might as well compete and keep some of that money over here.

 

That’s a very seductive argument, but it has two serious flaws.  First, most of the money lost in a casino does not stay in the host community, as was discussed earlier.  Second, and this is critical, a new casino would increase dramatically the amount of money gambled and lost by local residents.  In the process, it would increase the number of pathological gamblers.

 

Strong evidence for this conclusion has been developed by Dr. John W. Welte, of the Research Institute on Addictions here in Buffalo.  Based on a national telephone survey of adults, he and his colleagues found that “[t]hose who live within 10 miles of a casino have twice the rate of pathological or problem gambling as those who do not.  The most straightforward explanation for this relationship is that the availability of an attractive gambling opportunity can lead to gambling pathology in some people who would not otherwise develop it.” [4]

 

Some types of gambling are more addictive than others.  It seems to depend on the frequency of the opportunity to make a new bet.  For that reason, wagering on horse-racing and betting on traditional lotteries with once a week drawings have a relatively muted impact.  This is not to say these activities do not lead to pathological gambling -- they do.  But fast-paced gambling opportunities, such as are provided by casinos (like the one the Seneca Nation wishes to open in Erie County), or by the new video lottery terminals (like those that are slated to be installed at the Buffalo Raceway in Hamburg), are much more addictive.  The time required to make any finite number of bets is telescoped, so that people typically become addicted in as brief a time as one year.

 

Gambling casinos bring crime.  Open a casino, and you can expect more vagrants and prostitutes, more drug and alcohol-related crime, more domestic violence and child abuse, more insurance fraud and other white collar crime, more juvenile crime, more crimes of property, and more organized crime.[5]

 

Some of the street crime associated with casinos is aimed at gamblers as prospective victims, and this type of crime will be found most concentrated near a casino.  But like the eye of a hurricane, the area right around a casino is generally well-patrolled and relatively free of crime.  However, the many gamblers who reside in neighborhoods throughout the entire host community, and who lose money they cannot afford to lose, will bring the devastation back home with them, and so crimes that result directly from those gambling losses can be expected to increase throughout the community.

And indeed, this is what we find.  "Atlantic City's crime rate rose an incredible 258 percent within ten years of the legalization of casinos. In Gulfport and Biloxi, Mississippi, the site of 11 out of 13 casinos in that state, crime increased in every category in 1994, with murder, rape, robbery and car theft at least doubling. Three years after casinos were legalized in Deadwood, South Dakota, felony crimes increased by 40 percent, child abuse was up 42 percent, domestic violence and assaults rose 80 percent."[6]

 

Since increases in crime invariably come with expansions in legalized gambling, law-enforcement authorities in many jurisdictions are opposed to it.  In one major jurisdiction I cannot name for reasons that are probably obvious, it is the one point of agreement between the head of the police force and the head of the police union.

 

So we object to casino gambling on economic and social grounds.  There are also significant legal objections.

 

Most importantly, casino gambling -- so-called Class-III gaming -- is banned by the New York State Constitution.  The Governor of New York, with the acquiescence of the State Legislature, has entered into a Gaming Compact with the Seneca Nation of Indians that permits activities that are clearly unconstitutional.  Evidently, the Governor feels that because the 1988 Federal Indian Gaming Regulatory Act (IGRA) permits a state to enter into a compact allowing Indian gambling, that provides some sort of legal cover for any and all such compacts.

 

But this is a bizarre legal theory.  IGRA restricts the permitted gaming activities to those that are otherwise legal within the state under at least some circumstances.  Over the years, our State Constitution has been amended to incorporate specific exceptions to its ban on gambling.  These exceptions permit the lottery, horse-racing, and various other lesser forms of gambling.  But there is no exception that would legitimize casino gambling.

 

Moreover, in permitting the state to enter into a compact, IGRA does not authorize any state official to violate legal process as it is defined within the state.  Congress could have simply legalized casino gambling for Indians, thereby overriding state law, but it chose not to do that.  IGRA effectively leaves it up to the states, and the states are to use their normal constitutional and legal processes to decide what they want to do about it.

 

In our state, with its constitutional prohibition of casino gambling, in order to enter into such a compact legally, a constitutional amendment would have been required.  The amendment route has been tried before, without success, because a majority of New York State's voters were opposed to casino gambling.  So, the Seneca Gaming Compact is nothing more than an end-run around the Constitution, as some of our elected officials have acknowledged in rare moments of candor.

 

A lawsuit challenging the constitutionality of the Compact is slowly winding its way through the New York State court system.  For the reasons outlined above, the State's actions may well eventually be overturned.  In this case, the remedy may well include closing gambling casinos that have already opened. For Erie County, it would be much better to stop this mistake before it occurs.

 

Any gambling casino would be problematic, but for the proposed Erie County casino, the question of sovereignty complicates matters enormously. A Seneca-owned casino in our community would bring with it an additional set of legal and fiscal problems, owing to the fact that it would be owned not by the State, not by commercial interests subject to all the laws of the Nation, the State, the County, and the host municipality, but by a sovereign entity.  As such, it would pay no state or local taxes.  The only revenue the state would derive would be a negotiated lump sum in lieu of the taxes that might otherwise accrue to the state and local governments.  Even that revenue is subject to conditions that may not be met,[7] and any local revenue would have to come out of the state's share.

 

The land for the casino, and for any ancilliary enterprises, would be taken into trust by the Federal Government on behalf of the Seneca Nation.  It would be theirs forever, regardless of the ultimate disposition of the casino.  Any economic enterprise in which they chose to engage would be untaxed.  The Legislature has attempted to rectify this omission with regard to state sales taxes, but at this point it is not clear that this effort will succeed.

 

Even if successful, that legislative effort fails to address the more devastating problems caused by a failure to collect local property taxes.  Some 18,000 acres have been purchased by the Oneidas in the vicinity of Turning Stone Casino near Vernon, New York, using profits from the casino.  These additional lands, scattered in discontiguous parcels throughout two counties, have been claimed as part of the Oneida Reservation.  That claim is unsettled, but the practical effect has been economic devastation for the host communities.

 

In the proposed sovereign entity, any dispute would be subject to resolution by the Seneca court system.  For example, a dispute between a customer and the casino would be resolved by the courts of the Seneca Nation -- owners of the casino.  No civil suit against the casino could be brought in State Court, as the Seneca Nation has sovereign immunity.  If the host municipality finds that its revenues are less than had been anticipated, it could take the matter up with the State, but neither the State nor the municipality could audit the books of the casino.

 

Environmental laws and labor laws do not apply on the reservation, and can be enforced only to the extent that the Indians are willing to abide by them.  As an indication of the willingness of the Senecas to abide by such laws and regulations, recall that the enabling legislation that allowed the Governor to negotiate the Seneca Gaming Compact contained a provision to ensure the rights of the casino workers to organize.  The construction workers who renovated the Convention Center in Niagara Falls indeed were unionized.  But the current employees of Seneca Niagara Casino will tell you that the Senecas have strongly discouraged any attempt at unionizing the employees, and as of today it has not happened.

 

The battles for progressive rules and regulations in so many areas, that have been fought over so many decades, will be rolled back on any land that becomes part of a reservation.  This is an unintended consequence, to be sure, but a very real one.

 

Where have our political leaders been on this issue?

Buffalo Mayor Anthony M. Masiello wants casino gambling.  It would wreak havoc in the City, and it would cost the city much more to remediate the social destruction it would bring than the City would ever hope to see in revenue, but he wants it because "we need the revenue."  For his part, Cheektowaga Town Supervisor Dennis H. Gabryszak wants it too.

 

Erie County Supervisor Joel A. Giambra at one time said he did not want casino gambling here, but seems these days to be content with a feeble effort to direct it to the waterfront.  Most of the members of the Buffalo Common Council and the Erie County Legislature have seen fit to say as little as possible about the issue.

 

Our State Legislative delegation, with few exceptions (notably Arthur O. Eve and Sam Hoyt), has promoted it.  One of our area Members of Congress was a fierce opponent of legalized gambling, but his district was gerrymandered out of existence and he is now gone.  Another Member of Congress from our area told me that he agreed with me on the substance of the issue, but he was supporting a casino because that's what the local officials want (he was referring to the Mayor).

 

Why have so many of our public officials acquiesced to, and even promoted, such a blatantly illegal and harmful scheme?  One reason may be a belief that this is what the people of Western New York want.  And of course some of us do.  But the citizens of Erie County have never been allowed a referendum on the issue.  However, The Buffalo News has attempted to gauge public opinion, most recently last June.  The News commissioned a scientific poll, conducted by Cornerstone Research & Marketing of Amherst.  They found a 54% - 40% majority in the County, and a 63% - 36% majority in the City, opposed to a casino here.[8]   So, to the extent the people have spoken, they have said No.

 

Even among the Senecas, support for the idea is questionable.  Talk to leaders of the Seneca groups opposed to gambling -- people like Susan Abrams or Bob Jones -- and you'll have some idea of the distortion of popular will that took place in the Seneca referendum on casino gambling.  The Nation spent millions of dollars -- money that belonged to the entire Nation, including people on both sides of the issue -- to purchase a very slick ad campaign for a yes vote.  There were strong allegations of vote-buying.  Fully half the eligible voters did not vote.  I have been told[9] that many of these non-voters were the traditionalists who do not believe in gambling.  Unfortunately they do not believe in voting either. In the end, the pro-casino side won in a very close vote, by approximately 100 votes.  This was the extent of the popular mandate for a course of action that would change our community forever.

 

Finally, casino gambling raises a moral question.  The question is not whether gambling per se is an immoral activity, but whether the pursuit of gambling casinos as an economic development tool is a moral course of action for a state, a county, or a city.

 

Perhaps the most fetching aspect of the rationale for the entire Indian gaming program is to help one of the poorest groups of people in the Nation.  The actual results, in terms of helping the Indians, have varied over a very broad range.  Some tribes, or at least some individuals within some tribes, have become incredibly wealthy, while others have hardly benefited at all.  Some of the Senecas have indicated to us that no money has as yet been distributed from the profits from Seneca Niagara Casino.

Be that as it may, we can stipulate that the notion of doing something to benefit the native peoples is certainly worthwhile.  But is this not an obligation that belongs to the entire society?  Is it sound social policy to seek absolution for the shortcomings of the larger society by placing such a burden solely upon one of the poorest communities of the State and concentrated on the poorest members of that community?

 

Can a state or any government legitimately raise revenue through a program that singles out its most vulnerable citizens for a special burden?  That is exactly what a gambling casino in Erie County would do.

 

We hold that the most solemn obligation of any government is to protect its citizens, within its sphere of influence.  A government that cannot meet that simple obligation is not legitimate.  Casino gambling is clearly a harmful enterprise, indeed a toxic enterprise, and yet officials of our State Government have relentlessly pursued it.  I have to say, in all candor, that New York State, like so many other states, has utterly failed this test of protection in the matter of casino gambling.

 

So we ask you, as among the area's most politically involved citizens, to take a close look at this issue.  We have some literature to share with you, and there you will find our web site address, with links to other sites containing a great deal of information.  Please take the time to familiarize yourself with some of this information.  If you then conclude, as we have, that casino gambling is wrong for our community, we urge you to use your considerable talent, energy, and political savvy to help in the effort to keep casino gambling out of our County.

 

Thank you.