May 22, 2002
The first heart-of-Buffalo gambling joint Q&A
The first heart-of-Buffalo gambling joint Q&A
What has been the experience of other cities that located a gambling casino on the same plaza as city hall and a new federal courthouse?No other city has located a gambling casino on the same plaza as city hall and a new federal courthouse.
What has been the fiscal benefit to other cities that located Indian-owned casinos in their downtown area?
No other city has located an Indian-owned gambling casino in its downtown area.
What will be the economic effect of placing under Seneca control the Statler building, the property Carl Paladino and others have already agreed to sell to the developers, the new parking and garage space that will be built for the casino's customers and old parking space that will be turned over to them, the casino-owned housing units near the casino, and other property along and around the Delaware avenue site owned and operated by the casino?
All properties directly utilized for gambling and facilitating gambling, and probably everything else, will be taken off the tax rolls. The tax base of the city, therefore, will decline further, requiring, as this year, additional increases in residential real estate taxes.
Commercial operations getting major tax incentives from the State to locate in urban areas normally contract to make payments in lieu of taxes to the municipalities so the municipalities aren't having to bear the burden of increased costs with no fair compensation. What provision does Pataki's pact with the Seneca nation make for payments in lieu of taxes to the city of Buffalo?
None.
What steps have the mayor and Common Council taken to compensate for the loss in tax revenue and absence of payments in lieu of taxes?
None.
What legal and economic studies did Mayor Masiello and Buffalo's city government and County Executive Giambra and Erie County do before enthusiastically endorsing the proposal for a gambling joint across the street from City Hall and two blocks from County Hall?
None.
What will be the effect of the sale of tax-exempt cigarettes on local merchants?
They will lose whatever they make on cigarettes (I can't get too excited about that one; everybody who sells cigarettes should lose something, given the harm those poisonous little tubes do), and the state will lose cigarette tax money it would otherwise have taken in.
What will be the effect on local bars and restaurants and theaters?
Opinion is divided. A few bar owners think they'll get increased traffic because of spillover from the casino or people who just want to get outside the building for a while. Others fear that, since the primary clientele will be local, the money lost in the casino will be subtracted from expenditures that would otherwise have been made in local bars, restaurants, and theaters. Detroit's three casinos have had minimal positive impact on Detroit's local businesses, and far more of Detroit's clients are from out of town than Buffalo's will be.
There are casinos in downtown Detroit and the city is happy with them. Why wouldn't Buffalo be happy with its own downtown casinos?
The City of Detroit gets a good deal of money from its three casinos. Buffalo is scheduled to get almost nothing. The area where the Detroit casinos went was already Desolation Row; the area where Masiello and the developers want to put the casino is the heart of the city.
Whaddaya mean "Buffalo gets almost nothing." It's getting 6% of the casino's take. I read that in the Buffalo News.
Somebody needs reading and arithmetic lessons.
The State gets 25% of the slot machine drop (the money put in), nothing else. Nothing from the board games and table games, which maybe don't make as much money as slots, but they still make a lot of money. The State gets that 25% only after eight years. For the first four years, State gets 18% of the slots action; it gets 22% years in years 5-7. It reaches 25% only in the eighth year.
An attorney in Pataki's office said last year that the political units involved would get 25% of the State's 25%. That means that Buffalo, Niagara Falls, Erie County and Niagara County split 25% of 25% of the slot machine drop, which comes to a total of 6.25% of the slot machine drop. If that money is apportioned equally, each entity then gets 1.56% of the slot machine drop.
If the slot machine drop in the Buffalo casino were $100 million a year, which no one expects it to be, the city of Buffalo would get $1.56 million.
Even that isn't definite: Governor Pataki has yet to promise the city anything specific.
$1.56 million isn't chickenfeed. The city could really use that. That's more than two years of Mayor Masiello's cuts on the city's arts organizations.
True, but remember that the cost of generating this $1.56 million is the loss of all that taxable real estate, the decline in surrounding business wage, tax, and multiplier income, and the extraction from the area's economy of millions of dollars that would otherwise have had an economic multiplier effect. That $1.56 million in "income" is like borrowing from a loan shark.
So this means a lot of money will be going to Albany and Buffalo will have less money with which to provide civic services?
Right.
That's like a new state tax, then.
That's one way to look at it. It will be mostly money from local people going to casino operators and to the State treasury. But they don't call it a tax any more than they call the State's huge take on the lottery a tax.
Is it really true that no one on the mayor's staff read the compact between Governor Pataki and the Senecas before the Mayor endorsed the compact?
That's what they told reporters. It's hard to believe. Maybe they just didn't want to answer questions about a process Governor Pataki had kept them out of. If city hall attorneys ignored a document the contents of which are so important to the city they represent in a novel or a movie, it would be only if the novelist or movie director wanted to portray them as stupid, lazy, bought off, or scared off. I don't know what reason people in real life have for not reading key documents in areas of their public responsibility.
Is it really true that the Governor gave Buffalo's Mayor and Common Council no role in these negotiations, which may have a profound effect on life in the city for decades to come?
Yes, it is.
Why didn't they scream and yell and say "You can't do that to us! No taxation without representation or something like that?"
Beats me.
What is the difference between the Detroit casinos and the proposed Buffalo casino?
Other than the fact that the city of Detroit gets a lot of money out of its three casinos and the city of Buffalo won't, there is the key fact of location, location, location.
The idea at Detroit was to catch the Americans on their way to gamble, go to the strip joints, and dally with the whores in Windsor, Ontario, just across the bridge or through the tunnel. The bridge and tunnel are right there and you can see the enemy camp from Detroit. It's not at all like Buffalo and Niagara Falls, Ontario. There is no Windsor adjacent to Buffalo, so there is no flow of casino-bound traffic for the Buffalo casino to skim.
Of course there is. There are all those Americans driving through here on their way to the Niagara Falls casino. Now they'd stop here.
The only out-of-towners who would take the Peace Bridge to get to Niagara Falls are coming from Lackawanna. Travelers from elsewhere get to the region via the Thruway and to Niagara Falls via the Youngman across Grand Island.
Anybody who thinks otherwise probably thinks putting a casino across the street from City Hall and the new Federal courthouse is rational.
Would you drive 300 miles to go to the beach and then spend your vacation at a hotel with a swimming pool 20 minutes away from the beach instead? There's a billion-dollar facility going up in Niagara Falls, Ontario. It will have everything except eternal life. The casino's hotel rooms will overlook one of the most beautiful physical sites in the world. If, as most casual gamblers, you play until you use up your money, you get to play longer at Casino Niagara because the exchange rate gives you more dollars to play with. If you win, you get to take home more money because the Canadians decided not to be tax collectors of the IRS.
So who would make the drive and stop 20 minutes away from that in order to gamble in a converted failed convention center and a converted hotel ballroom in a building the hotel rooms of which look out on an art deco city hall?
So who's going to gamble at Casino Buffalo, then?
Mayor Masiello thinks it will be hundreds of thousands of strangers coming from far, far away, like the people who go to Las Vegas every year. More probably it will be people from around here. Local people. People who don't have enough money to make the trip to Niagara Falls but who will drop their $50 in a local joint. Working stiffs. Gambling addicts. And one really dumb guy from Scranton who, while driving with his girlfriend to NF, Ont, says, "Hey, I got a great idea: let's head for downtown Buffalo instead. The hotel rooms in the casino have a great view of an art deco city hall and the new federal courthouse."
Why was nursing home operator Mark Hamister at Mayor Masiello's side at the May 19 City Hall press conference in which the Mayor said he'd do anything to get a gambling casino across the street from City Hall?
Hamister wasn't there because of his nursing homes. Hamister is chairman of the Buffalo-Niagara Partnership, a business organization. A lot of people think the BNP is a community organization, that it undertakes projects on the basis of how much good they will do the community at large. That is untrue. It is a membership organization that undertakes projects on the basis of how much money its members will derive from them. For an example, the Peace Bridge expansion project, where it stoutly opposed community involvement, community input and advocated a very expensive anachronistic steel bridge proposal that benefitted only shippers (mostly in Canada) and steel manufacturers (the Public Bridge Authority chair through much of that was the president of a steel company).
But there are lots of downtown casinos, and they're all doing fine.
There are lots of downtown casinos in Las Vegas and Reno, two single-industry cities (now that every state other than New York and Utah have no-fault divorce). I've already mentioned the Detroit situation. Most other "city" casinos are really outside of town or down at a river- or lake-front, away from downtown, with their own parking lots and their own traffic patterns. The casinos in Baton Rouge, for example, are on the river, and are separated from downtown by a wide roadway.
And casinos don't automatically do well. All six of the riverboats built for New Orleans went out of business or had to be moved far out of town. The single casino still there, Harrah's, recently pressured the State to cut its tax rate by 50%, which means it is now costing the New Orleans economy more than it is bringing to it.
What about that UB report that says a casino could help Buffalo?
That report—"If Gambling Comes: The location, design and management of urban casinos"—was based on no study of Buffalo's present or possible economic situation and it deliberately avoids the question of whether Buffalo would be better or worse off with a gambling operation in the heart of town. It takes a casino operation as a given. And it's not so much a report as a transcript of a public conversation between two casino supporters (Mayor Masiello, Rick Jemison of the Seneca Tribal Council), one casino opponent (Sam Hoyt), and three professors, one of whom has studied casinos elsewhere.
More important, the report says that a casino could help Buffalo if four conditions exist: (1) the casino should be located downtown to take advantage of current infrastructure, existing buildings, and visitor attractions; (2) the gambling facility should be designed so the economic benefits are shared with local businesses; (3) the casino should make its money from tourists, not residents; and (4) revenues should accrue to the local community rather than the state.
"The report is valuable," says its co-editor, UB planning professor Robert Shibley, "because it describes a set of circumstances that would be required to make a casino work." Alas, just about none of those circumstances exist or will exist in the Buffalo situation. It's like Buffalo's city planners read the report to find out what should be done, then did just the opposite.
Other than being located downtown and using current space, not one of the assumptions in the UB report has anything to do with what the Senecas plan and the Mayor and Common Council accept without question. The gambling compact includes not a word about the gambling facility sharing any kind of action with anybody, it is highly unlikely that more than a fraction of the casino's profits will come from tourists, and virtually none of the revenues will accrue to the local community.
There is every reason to assume that the Buffalo casino will be like nearly all other urban casinos: windowless, designed to keep the gambler inside as long as possible and to get the gambler's money out of town as quickly as possible. The UB report documents an interesting exchange of opinions, but it is pretty much irrelevant in this matter—except insofar as it helps clarify exactly how botched the Buffalo situation really is. (Click here to look at it yourself in PDF format.)
What's the point of fighting. It's a done deal, right?
It's a done deal the way the anachronistic steel twin span was a done deal and the way moving Children's Hospital to High Street was a done deal. In both of those ill-conceived and fortunately failed endeavors, outside interests who couldn't care less about the fate of Buffalo and high-pressure developers who make money from construction action, not from what happens next, piled on the pressure and the publicity. Tony Masiello waffled through much of the Peace Bridge affair and he went into deep hiding in the Children's affair. The steel manufacturers (one of whom chaired the Public Bridge Authority) said build steel. The Buffalo-Niagara Partnership told the public to shut up and mind its own business. The Kaleida board (whose chairman is on the board of that same steel manufacturer and who is in partnership with one of the developers) said we don't have to listen to anybody. Both times the public refused to let the pros and money guys have their way, both times the public won, and both times the city was better for it—though some steel manufacturers and developers didn't get as much richer as they'd hoped.
So, no, it's not a done deal. Nothing's over till it's over.
(To be continued.)
—B.J.For some earlier discussions of Pataki, Masiello, and gambling in Buffalo, visit:
"Casino Follies: Gambling with other people's money," Blue Dog 23 Aug 2001
"Buffalo's Casino: Sure thing or sucker bet?" Artvoice 19 July 2001Copyright ©2002 Buffalo Report, Inc.