People play video roulette at the new Resorts World Casino-New...

People play video roulette at the new Resorts World Casino-New York operated by Genting New York Llp at Aqueduct race track in Queens (Oct. 28, 2011). Credit: Jason Andrew

First of an occasional series

Prohibition didn't work well in New York State, but it would have fared even worse if alcohol had been legal in Connecticut, New Jersey and Pennsylvania. And if our laws forbidding booze had a few exceptions, allowing gin upstate, vodka in nine huge liquor stores spread across the state, and beer and wine everywhere, it wouldn't have worked at all.That pretty much describes New York's gambling laws.

So in the wee hours of the morning on Thursday, legislators in Albany passed a proposed amendment to the state constitution to permit full casino gambling at seven locations. The amendment, pushed by Gov. Andrew M. Cuomo, must be approved again by a newly sworn legislature in 2013, then go on the ballot that November.

It's estimated that $2 billion to $3 billion that could be gambled in New York is being tossed on the tables and into machines in other states. Changing the constitution, and the New York gambling market, can remedy that -- if done properly.

Starting in 1821, every form of gambling was constitutionally banned in New York. But in 1939, the door opened a crack with an amendment allowing on-track gambling on horses. Bingo got the nod in 1957, and the lottery for education was approved in 1966. A 1976 amendment led to "Las Vegas nights" conducted by religious, charitable and nonprofit organizations the next year. After the 9/11 terrorist attacks, the legislature decided, without amending the constitution, that slot machines at existing race tracks, more Indian gambling and multistate lotteries were also allowed. That move was upheld by the State Court of Appeals in a 2005 decision many considered blind to the actual wording of the constitution.

Today, we have a mess.


Differing returns

Nine racinos at horse tracks, featuring the New York version of slot machines known as video lottery terminals, paid differing percentages of the estimated $1.2 billion they reaped last year, resulting in a net of about $600 million for the state. Different percentages are also due to the state from the five Indian casinos that dot the Canadian border, which right now aren't even paying up in a dispute over whether the placement of nearby racinos violates their gaming compacts.

Off-track betting, which for decades provided meaningful revenue for the state and local governments while also serving as a handy patronage pit, is now an unsteady monument to a shriveling pastime. New York City OTB went bust, Suffolk OTB is in bankruptcy court, and the other regional OTBs are struggling. As they went, so went the New York Racing Authority, owner of Saratoga, Aqueduct and Belmont racetracks, which survived off payments from the OTBs until a steadier revenue stream started flowing from Aqueduct's 5,000 video slot machines last October. More and more, New York's entire horse racing and breeding industry exists thanks only to a brew of politicized deals that forces the racinos, or rather the patrons who play the slots, to pay its bills.

Unlike other states, New York has no gaming commission to guarantee gamblers get a fair wager, or that the state collects the levies it is due. There is no statewide initiative, funded by the gambling take, to combat the very real social ills of widespread betting.

Since gambling was legalized in Nevada in 1931, New York money has flowed to other states, but it wasn't until Atlantic City legalized casinos in 1976 that the demand for gambling really hit home. Now, Empire Staters looking for a wager can head to the Poconos of Pennsylvania or to Philadelphia. They can throw dice at the Indian casinos of Connecticut and turn cards in vacation spots across the Caribbean and throughout California and Nevada. But most New Yorkers live nowhere near the upstate casinos, and can't play a legal hand of blackjack or poker in their home state without driving for hours.


Do it right in New York

In the coming weeks, this series will analyze in detail the potential benefits from expanded gambling. For now, we offer a short summary.

The seven licenses should bring significant revenue to the state, as well as municipalities where the casinos are located, and a few will have the extra benefit of large construction and development ventures that offer more than just baccarat and pai-gow. Gambling revenue is not a panacea to budgets, nor is gambling the real key to economic growth, but done right, it helps, particularly when there is no appetite for new taxes.

What is essential:

A state gambling commission that keeps the industry fair and clean and makes sure the revenue is maximized for the state, not special interests.

A dedicated stream of revenue that goes to prevent and treat gambling addiction.

A plan for Aqueduct, Belmont, the Catskills and the Shinnecock Indian Nation. Tough decisions lie ahead at Aqueduct, where racino operator Genting New York Llc proposes to build a 3.2-million-square-foot convention center and several thousand hotel rooms in exchange for an expansion of its racino and reduced payments to the state on thousands of new machines.

Down the road, Genting is determined to convert part of the racino into a full casino if it wins one of the seven licenses. Does the convention center deal make sense? Do we need to build such a large facility, and finance it by reducing the state's gambling cut? If so, how much?

And what of Belmont? If horse racing is to continue in the metropolitan area, Belmont Park, a neglected but lovely track with rich history and a Triple Crown race, is the place for it, but it will need support from the gambling at Aqueduct, or its own casino. And the surrounding community needs serious revitalization.

It's impossible to talk about Belmont without talking about the Shinnecock Indian Nation, which hopes to support itself with a casino at the Nassau track. Long denied their due by the state and nation, the Shinnecocks deserve a good deal, if not at Belmont then somewhere, and soon.

Then there is the Catskills. The moldering majesty of this mountain retreat could charm again with the right combination of gambling, accommodations and entertainment. A resort that entertains visitors for several days, instead of just a few hours at a machine, could really increase tourism and attract non-gamblers as well.

Casino gambling should be legalized in New York. It's about time. But it will take more than a few votes in Albany to make it a success. A major chapter of state law will need to be written and skillfully implemented; shrewd development deals must be struck, and our political leaders must make sure the ultimate winners are the taxpayers. Only then will we have hit the jackpot.


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