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Lesson from Falls: Casinos are a gamble

Cha-ching! That was the jubilant sound from across the state last week as politicians began counting up casino cash they hope will soon roll in. The Catskills rejoiced at hitting the jackpot. The Southern Tier was shocked to lose out, and struggling Atlantic City breathed a sigh of relief that New York’s three newest casinos won’t be nearer.

But here’s a hard-luck tale that might make newly anointed casino towns think twice before counting their winnings. It begins with the same hopes for new jobs, boatloads of cash and an opportunity to rewrite the future. It ends, at least for now, with a city still struggling to pay its bills and more reliant on gambling dollars than ever.

It was December 2002, and the doors of the Seneca Niagara Casino were just about to open. The City of Niagara Falls was a tattered tourist destination with a world-class waterfall, a place with as many vacant storefronts as memories of the way things once were. The casino, residents were told, would bring the jobs, construction and city revenue they had been chasing in failed development deals for years.

But there were already signs the fine print wasn’t as good a deal as it could have been for the Falls. “You play the hand you’re dealt,” then-Mayor Irene Elia told residents. The city, she noted, had been shut out of the negotiations.

The result was a deal that swept most of the public’s take from the slot machines straight to the state. The deal, once the revenue sharing maxed out, looked like this: of the public’s portion of the casino revenue, the state keeps 75 percent. Niagara Falls and several local entities share the remaining 25 percent.

New York siphoned off much of the revenue before any of it got to the city.

Some say Niagara Falls was too starry-eyed by casino fever to push for more. Some say city officials were essentially told that the governor knows best. Either way, it didn’t take long for squabbles over money to begin.

While the state gorged at the buffet table, the Falls was left fighting over its scraps. For nearly three years after the casino in Niagara Falls opened, local leaders argued over how the local share of casino cash should be spent. When that was finally worked out, it wasn’t long before another dispute – this time between the state and the Senecas – blocked the flow of casino dollars again.

Four years went by with zero casino dollars flowing to Niagara Falls, nearly crippling the city before the money was finally released. City leaders are still dealing with a tenuous financial outlook and spent this budget season attempting to stave off layoffs and tax increases.

Don’t get me wrong. Plenty has happened that wouldn’t have without the casino. Jobs came. A culinary arts institute opened. Hotels have been renovated. A new police station and City Court were constructed. Streets have been paved and buildings torn down. But when you look at the city’s share of casino cash, it hasn’t been a sure bet.

The terms for the state’s newest casinos have already been spelled out: 80 percent of the tax revenue will go to the state for education, 10 percent will be split among the host municipalities and counties, and 10 percent will go to nearby counties.

Niagara Falls is still on a path to rebuilding itself. But after more than a decade of gambling, one lesson is clear: Casinos don’t bring free money. It comes with the whims of Albany.