In 2002, NY Governor George E. Pataki – while running for reelection - gave to the tiny, foreign nation, of approximately 7,300, the Seneca Nation of Indians, their own, brand new country in what was formerly a part of downtown Niagara Falls.
Ostensibly gifted to build a casino, it was hoped it would attract tourists, be a catalyst for development, and generate revenue for Albany -- through collection of a percentage of slot machine revenues. There was also a provision to provide money for the “host community” which was believed at the time to mean the city of Niagara Falls.
None of it worked as promised -- except for what was promised to Seneca and Albany.
Governor Pataki knew that land ceded to a foreign nation is removed from local tax rolls. The city would lose revenue. He knew money spent on items that generate sales tax, in a newly-created foreign nation, are tax-free. Both Niagara Falls and Albany would lose.
It was not discussed much at the time of the other costs of gambling. Whenever casinos open, pathological gambling goes up; bankruptcies go up; crime goes up, as it has in Niagara Falls. And for every job a casino creates, one (or more) local jobs are lost since people spend more of their entertainment money on gambling and less at local businesses.
But Albany would take care of Niagara Falls, the governor promised.
The Seneca-Niagara Casino, housed in the city’s former convention center, opened December 31, 2002, immediately killing a destination-oriented convention business which brought millions of dollars from tourists to local businesses, and millions more in tax revenue. Ironically, when the convention center's 82,000 square foot building became a foreign casino, it wasn’t frequented much by tourists anymore, but, mainly, by middle and low-income residents of Western NY. This type of operation, where a casino “wins” from a large number of low-level, local gamblers $50-100 each, is known in the gaming industry as “the grind.”
Seneca “ground” from 11,000 average daily visitors about one million dollars per day.
To put it in perspective, the Niagara Falls library is in danger of closing because of a two million annual shortfall; Seneca is taking out of the peoples of the Niagara region in 48 hours—two million.
What’s good for Seneca, however, is bad for the goose - Niagara Falls: Seneca has the right to open non-gaming businesses without paying taxes -- even if it competes with tax-paying businesses in Niagara Falls. Seneca opened a buffet, a pub, a “high- end” steak house, an Italian restaurant, an Asian restaurant, coffee shops, a glamour spa, gift stores, and a 26 story hotel – all of which compete directly with local businesses.
Meanwhile, two local hotels were foreclosed, a third hotel closed. Stores have closed. Restaurants closed. People opt to dine at glamorous Seneca restaurants where tax- free food gets them more for less. At local taverns, too, they lost customers -- both from NY's smoking ban (at Seneca you can smoke freely) and because Seneca gives free drinks on the gambling floor – a smart psychological move since drunks bet freely. Several taverns, consequently, closed.
Today, Seneca is expanding. While they pay Albany only on slots, Seneca sells sweatshirts, baseball caps, T-shirts, sweaters, jackets, golf wear, costume jewelry, plush toys, jewelry, blankets, sculptures, TVs, high-end electronics, DVDs, golf clubs, cameras, and diamonds -- all tax-free- on tax- free land Albany gave them.
More stores are coming, and the effects have not been seen: The new Seneca-Niagara Hotel, the largest hotel in the area, with deluxe rooms and pillow-top beds, ought to impact this season: Local hotels would have pillow-top beds, too, if they paid no property tax, sales tax, income or bed tax. On slow nights, with 604 rooms, Seneca can offer tax-free, luxury rooms at the same price that mid-quality, tax-paying US hotels can offer. And there’s always the chance Seneca can rook them at roulette.
A smoke shop is anticipated: After beating locals at slots, Seneca can offer odds for lung cancer -- tax-free.
Still, Albany wants us to believe the casino is having a “positive impact.” True, Seneca generated $100 million in revenue for Albany, and $72 million was paid in payroll during 2004 – most of which was paid computed in hourly divisions at near minimum wage. Meantime, $300 million in gambling losses came out of locals’ pockets, locals who, sometimes, gambled with more than entertainment money. Seneca holds almost a hundred mortgages on customer’s homes.
Additionally, $100 million in sales tax was lost. And lost property tax on (former USA) now Seneca land, and lost convention business adds up to untold millions.
Now Governor Pataki wants the entire “local share” to go a state agency he created - called USA Niagara – so the “host community” will get nothing at all -- except what Albany decides.
The advantages of having an Albany-created, foreign nation casino seem more than a trifle one-sided -- here in Niagara Falls.