Suffolk Closeup: The house doesn’t always win

The closing of four and likely five of the dozen casino hotels in Atlantic City should cause public officials in Suffolk County and New York State to wake up.

The fantasy of legalized gambling providing a huge boost to governmental economies is a bad bet.

The issue is competition. “Mississippi Casino to Close, Hinting at Gambling Glut,” was a headline in July in the New York Times. The sub-headline read: “Demise of Harrah’s Tunica Will Deal Blow to Impoverished Delta Region.”

Just south of us in Atlantic City, thousands are now suddenly out of work and there’s fear that once impoverished Atlantic City is on a return trip to that status.

Las Vegas has charted a somewhat successful post-gambling future by expanding as an entertainment destination — but can that work elsewhere?

In Suffolk, gambling is also on the ropes. Suffolk Off-Track Betting is bankrupt with half its betting parlors shuttered in recent years. But many public officials and the OTB don’t seem to recognize the losing streak.

The lure of gambling was central to how we got saddled this year with New Jersey-based PSEG as the Long Island electricity utility and the decimation of the Long Island Power Authority. It started when Governor Andrew Cuomo floated the idea of bringing in PSEG but met resistance from state legislators from Suffolk as well as Nassau County.

So the governor pushed a deal in which both counties would get his go-ahead to set up huge facilities for video slot machines in return for Suffolk and Nassau legislators supporting his utility “reform” plan. More than half the Long Island legislators took the bait.

Now, Suffolk OTB, although bankrupt, is preparing to borrow up to $90 million (even if you say it fast, $90 million is a lot of money) largely to build a 1,000-video slot machine casino. Also, $16 million of that would go to creditors of Suffolk OTB, who had been left on the hook by the county.

Will video slot machine casinos draw customers? Do you want to bet on that? Another New York Times story last month was headlined: “Albany Doubling Down as Casino Boom Fades.”

The article began: “New York State is charging headlong into the casino business, with four full-service gambling resorts expected to be approved this fall and opened as early as next year, and talk of a torrent of new revenue, thousands of new jobs and a proverbial jump-start for long depressed upstate communities. Supporters of the expansion — notably Governor Andrew M. Cuomo — hope it will reverse the fortunes of economically stagnated regions like the Catskills.”

In Massachusetts, some realistic thinking is going on. “Massachusetts May Shut Down Casinos Before Even One Opens,” was another Times piece last month, which began: “With the casino industry showing signs of retrenchment, voters in Massachusetts may do something that voters nowhere else have done, at least in the last century; slam on the brakes on casino gambling.”

Massachusetts “was one of the last states to climb aboard the casino craze” and in 2011 passed “legislation to construct three casinos and a slot parlor.” In a referendum next month, voters will decide whether “to repeal the law before a single casino has been built.”

One need only take a drive out west to see what a proliferation of casinos has done, or check out the situation up in Connecticut. Under the Indian Gaming Regulatory Act of 1988, a well-intentioned federal law to give long-suffering Native American tribes a financial boost, Indian gambling operations were set up all over the U.S.

As of 2011 there were 460 run by 240 tribes.

Driving in New Mexico in the 1990s, you’d come upon packed parking lots at Indian casinos, but in recent years, with casinos having spread widely in the region, most have nearly empty parking lots. All over the U.S. many of the Native American casinos are hurting. Foxwoods and its rival Mohegan Sun, across Long Island Sound from us in Connecticut, are both deeply in debt.

The competition in gambling has had its impact throughout the country. To our west, New York City OTB has gone bankrupt. It has left “$300 million in debt and as much as $700 million in liabilities for state taxpayers to handle,” Newsday reported.

A pot of gold at the end of the gambling rainbow? Both the gold and the rainbow have turned out to be illusions.