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Crapping Out in New York: 2.0

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If Gov. Cuomo wants to help the upstate economy, the first step is to not make it worse. Unfortunately, his casino gambling expansion plan has the potential to do just that.

At his May 9 press conference, he unveiled the first phase of his plan and a strategy for sealing the deal. It featured only upside potential: jobs, government revenue, and increased economic activity. But activity alone isn't progress, so his thinking is revealing. Corruption charges in Albany, too, insisted on a seat at the Q&A table. His swift response in delivering a reform package leaves no doubt he can act when he wants to (hydraulic fracturing comes to mind). But the course he's charting with casinos, indicates when it does act it can be in troubling ways.

He was emphatic: expanding casino gambling was the best and only option for improving the upstate economy. In keeping faith with the time-honored tradition of deal-making, where often what isn't said means more than what is, he presented nothing on the economic and social impact costs of his plan, or how and who he expects to pay for them. His "coming to grips" with the issue mirrored that described in the first release of Crapping Out in New York.

The governor is entitled to his opinion, not to withholding inconvenient important facts -- not if he wishes to reflect the high standards of integrity he purports to demand from others, and not if he believes voters, when provided with fuller information, will make informed decisions. Defrauding the public of that information might be acceptable within some circles, but it isn't defensible. And though Albany may not care, it's certainly not unaware.

Rather, it's as though practitioners of casino gambling economic theory break out in hives when held to account for the unsavory realities of gambling against a house, where a major portion of casino revenues pass through (often not from) people with gambling disorders. The legal, economic, and medical fallout from their wrecked lives -- and those of their families, friends, and business relationships -- comprise a well-documented, though politically ignored, public health and economic crisis. "Programs for the Prevention and Treatment of Problem Gambling," the hearing conducted last December by the NYS Assembly Committee on Alcohol and Drug Abuse, informs on that crisis.

Some factoids from the expert testimony: up to 1 million New Yorkers afflicted with gambling disorders, with just 5,000 receiving treatment; no state prevention services; 41 of 62 counties lack state treatment services; just $2.1 million in state funding to support prevention and treatment, while $60 million per year is spent just to market the NYS Lottery [in 2011 and 2012 lottery marketing dollars were $86 million and $92.1 million].

And medical evidence, reported in Medscape's "Gambling Addiction Explained?", demonstrates significantly different function in the brain's reward areas between people with and without gambling problems. It's been characterized as "substance abuse without the substance." So it isn't metaphorical to say addicted gamblers awash in state-sponsored gambling turn to the state for their fix.

Yet Mr. Cuomo continues to insist that those who oppose his plan are irrational, wrong-headed.

Now people want to say, 'well, I'm for or against gaming', and that's where the conversation normally starts. 'Are you pro gaming or anti-gaming?'. I would suggest that that is the wrong question; it's not gaming or no gaming. New York State is in the gaming business. So let's frame the question properly. And let's not deny the reality of the situation.

Indeed, so let's not deny that reality by blurring distinctions between gaming and gambling. And let's be clear about what the Assembly hearing record demonstrates: after many decades of promoting gambling, NYS (it doesn't promote tobacco or alcohol products) continues to ignore its responsibility for the gambling disorders inextricably bound to its gambling policies. Given this reality, there's no basis for concluding the state will begin assuming its responsibility under the governor's plan, and if there is a basis, the governor didn't discuss it. In the art of the deal, it's best to let sleeping dogs lie.

So if Mr. Cuomo isn't playing it straight on the costs of his proposal, the questions are why not and what are voters to do?

An informed answer to the first question becomes self-evident when considering some of the research not funded by pro- or anti-gambling interests. Although between just 2 percent and 5 percent of the adult population exhibit compulsive gambling disorders, they wrangle (because it often isn't theirs) up to 50 percent of casino revenues. So it's not rational for Mr. Cuomo to disturb that portion of a revenue stream he's promoting. The corollary: some New Yorkers are expendable.

The answer to the second question is this: wishing otherwise doesn't make it so, and if Mr. Cuomo and legislators believe otherwise, they should belly-up to the bar and explain why. Voters can either insist they do, or vote No on the casino plan, should it come to referendum. Here's why.

In their work to assess the total economic impact of casinos, independent researchers Earl L. Grinols and David B. Mustard point out that casino gambling is a social issue because, in addition to the direct benefits to those who own and operate casinos, benefits are reaped and costs are borne by people who don't gamble: "To correctly assess the total economic impact of casinos, one must distinguish between business profitability and social profitability"

Making that distinction in Gambling in America, Costs and Benefits, Grinols arrives at annual social cost estimates, noting they're likely higher, for each gambler with disorders classified by the American Psychiatric Association as either Problem or Pathological -- $3,716 and $13,304, respectively, after adjusting to February 2013 dollars. Using refined estimates of Prob&Path gambler prevalence from other researchers (2.54% and 1.15%), estimates for aggregate annual Prob&Path gambler costs can be computed, and for NY they're staggering. For the estimated 15 million New Yorkers 18 years or older, those costs are $3.7 billion -- and that's before implementing the Governor's proposal. For 2012, the average revenue for each casino in Atlantic City, NJ was about $250 million. Using that figure to estimate direct casino revenues likely from Governor Cuomo's seven-casino plan results in just $1.75 billion, from which NYS would then receive a portion through state taxes.

And too, findings, including those from the National Gambling Impact Study Commission Report, indicate an increasing prevalence of Prob&Path gamblers occurs with increasing the opportunities to gamble. To what extent Prob&Path gambling prevalence will increase under Mr. Cuomo's plan is unclear, but a safe bet says it will -- along with associated social costs.

My ears are already ringing. But here's the thing: If you want voters to support the governor's plan, show them the numbers before you ask them to vote on it; and make sure those numbers have stood up to independent peer review.

Consider, too, that designers of state-sponsored casino expansion plans frequently feature the need to address the "leakage" of potential gambling dollars into other states. Their mantra: "build it here and gambling dollars remain here -- and we'll attract more dollars from out-of-state gamblers." But given what we know about Prob&Path gambling, that isn't smart competition; it's race-to-the-bottom predatory economics.

More important, though, there's a better way, and it's this. The disproportionately large cost of Prob&Path gambling should be thought of in reverse. In other words, a disproportionately large savings can be realized by assisting those gamblers regain control of their lives, rather than creating more of them.

I thought that's what government was supposed to do?