Sunday, September 29, 2013

Video Slot Machines on Long Island and LIPA -- the Quid Pro Quo

            Some Long Island officials are betting that gambling will provide a big financial boost for the fiscally-pressed county governments of Nassau and Suffolk. Are they right or making a bad bet?

In June, in a surprise move, New York State Governor Andrew Cuomo—after months of saying no—suddenly agreed to the call from officials of Nassau and Suffolk to allow the two counties to set up facilities for video slot machines. Each could have a facility with 1,000 video slot machines.

The Cuomo turn-around, according to well-informed sources, was linked to getting the Long Island delegation in the New York State Legislature to support his plan to turn the Long Island Power Authority into a shell and have a private New Jersey utility, Public Service Electric and Gas, be THE utility on Long Island.

Then votes on a bill expanding gambling in the state that included the video slot plan for Long Island and votes on a bill to drastically alter the utility structure on Long Island were taken in the State Assembly and State Senate—and both passed. “The governor horse-traded his support for the slots for votes to pass his LIPA bill,” said one source.

Long Island had not been included in Cuomo’s original gambling expansion bill.  Right up through early June, it would have authorized three gambling casinos and video slot machines but only upstate. “LI NOT IN GAMBLING PLAN,” was the headline of a June 6th Newsday article. It quoted Assemblyman Phil Boyle of Bay Shore saying “he’s ‘disappointed but not deterred’ by the island’s omission in Cuomo’s plan.”

A week earlier, Nassau County Executive Edward Mangano and Suffolk County Executive Steve Bellone, with the presidents of the two counties’ Off-Track Betting Corporations, had gone to Albany, meeting with state legislators and “doubling down,” said Newsday, in seeking  “potentially lucrative video gaming” on Long Island. But Cuomo still felt this would take away from his desire to assist upstate through gambling.

Then, a week later, his gambling bill was expanded to allow video slot machines on Long Island and was voted upon simultaneous with Cuomo’s bill to drastically change the Long Island utility structure—which had faced stiff resistance from the Long Island delegation. The “opposition to the bill on LIPA fell apart with the addition of Long Island to the gambling plan,” said another source. “The two were linked.”

Is gambling the fiscal rescue some Long Island officials would believe? Consider the Page 1 story in the New York Times last month headlined: “Crowds Return to Las Vegas, but Gamble Less.” It told of a drop in gambling revenue with a “new influx of tourists, younger and less devoted to gambling.”

Or consider a Times piece a month earlier about gambling in decline in Atlantic City. “Revenues have fallen 40 percent since their peak in 2006 as new casinos in neighboring states have taken away gamblers,” it noted.

The video slot terminals in Nassau and Suffolk would be operated by the Nassau and Suffolk OTB Corporations—huge troughs for political patronage in both counties. And they have been in trouble. Suffolk OTB moved to declare bankruptcy last year (New York City OTB filed for bankruptcy in 2009).

The office of New York State Comptroller Thomas DiNapoli in a 2010 report titled “Financial Condition of New York State Regional Off-Track Betting Corporations” spoke of the “financial condition of the state’s five regional OTB Corporations” having “substantially deteriorated.” It said “various factors account for the significant and continuing downturn in handle including a diminished interest in horseracing” and “competition from unregulated internet gambling sites.” This “general decline” in horseracing is “demonstrated by decreased attendance at most state racetracks.”  There are not only now many casinos all over the United States diluting the gambling industry, but “government-sponsored lotteries,” too, noted the report.       

The lure of winning hundreds of millions of dollars in the Powerball lottery, owned and operated by 33 state lotteries, towers over winning the tiniest fraction of that on a video slot machine.

Meanwhile, Congressman Peter King of Seaford, whose district includes parts of both Nassau and Suffolk, introduced a bill in June that would license online gambling at the federal level, further spreading gambling choices.

Is the pot of government gold from video slot machines a mirage? I bet it is.