NY Comptroller report warns casinos "not a sure bet" as tax contributions mostly lag behind initial expectations

A recent report from State Comptroller Thomas P. DiNapoli covering the period from 2017 to 2022 reveals that while New York casinos contributed a total of $176 million in gaming tax revenue, the extent of benefits differed significantly among the host communities. 

The report is titled "Revenue Impact of Commercial Casinos on Upstate Local Governments." One of its key findings is that only the three smaller towns that host casinos realized significant fiscal benefits relative to their overall revenue.

“Casinos are not a magic fix that will solve local fiscal challenges,” DiNapoli said. “While casinos have generated local gaming tax revenue, the impacts vary for the communities that receive such revenues."

The State Comptroller said the report aims to give state and local officials "a clearer perspective that can help potential host communities avoid the pitfalls that arise with misguided expectations" about the public benefits of casinos. "They are not a sure bet," he warned.

DiNapoli’s 2020 report on gaming revenues showed that all four current 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, these revenues and tax contributions continue to lag reaching only 50-60% of initial expectations, the new report shows, with the sole exception of Tioga Downs in the Southern Tier.

Despite the revenue disparities, local governments did experience some benefits, particularly the smaller host towns. In Nichols, Tyre, and Thompson gaming tax revenue accounted for a significant portion of their total revenue, ranging from 30-60%. This influx of revenue enabled these towns to make substantial reductions in property taxes, providing financial relief for their residents.

However, the larger host city of Schenectady and the four host counties experienced relatively smaller fiscal impacts. In these locations, gaming tax revenue represented only 1-3% of their total revenue. For regional non-host counties, casino taxes constituted less than 0.5% of their overall revenue.

The report also delved into the impact of the COVID-19 pandemic on gaming revenues. Despite the recovery of gross gaming revenues exceeding pre-pandemic levels in 2022, local gaming tax benefits did not see a proportional increase.

Resorts World Catskills

This was partly attributed to amendments in New York's gaming law that allowed casinos to retain a greater portion of their gross revenue by negotiating cuts in their tax rates for Slot & Electronic Table Games (ETG) to 30%.

These changes resulted in a combined reduction of $41.9 million in tax collections in 2022, including $8.4 million that would have otherwise been allocated to local governments.

The report underscores the importance of realistic fiscal planning by localities when it comes to setting expectations for gaming revenues, the Office of the State Comptroller says. "DiNapoli’s audits of two host towns found issues including budgeting challenges associated with gaming revenue and the need for proper, multi-year financial planning."

The report comes as more municipalities prepare to host up to three soon-to-be-awarded Downstate casino licenses. With this gambling expansion in mind, the Comptroller says "an appropriate plan for the new revenue will be key."