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Casino plans sprout in US as states seek revenue

By David B. Caruso

Associated Press

Published: Monday, Jan. 16 2012 3:45 p.m. MST

"Gambling may simply shift money from one tax to another, limiting the net gain to the state," it said. "Consumers spend more money on gambling activities, they will spend less money on other items, such as recreation and even basic needs."

Gambling resorts, most notably Las Vegas, have responded to tougher competition by trying to make themselves into destinations for visitors of all stripes, offering concerts, theater, museums, zoos, restaurants and other attractions.

Genting appears to be planning a variation on that model for New York.

The company and the project's champion, Cuomo, have heralded it first and foremost for the planned convention center, which they have boasted will be the nation's largest.

Genting has insisted it will go ahead with construction of the center even if the state doesn't pass the constitutional amendment needed to fully legalize the type of casino it wishes to operate at the site, with table games run by human dealers rather than the electronic machines.

"I can't be clearer about this: This project, this convention center, is in no way predicated on the legalization of table gambling in New York," said Stefan Friedman, a publicist for the company. "We think there is a real opportunity here."

The company has, however, asked for permission to expand its current casino operation as part of the deal. It also wants to alter its revenue-sharing deal so it can take home a bigger slice of the profits.

There are some skeptics. The convention center the company wishes to build will be a 45-minute taxi ride from Manhattan, or an hour or longer by train. It will be located in a residential area where there are now no restaurants, shops or sites of interest, aside from nearby John F. Kennedy International Airport.

Convention centers across the country have been losing money for many years, and suffering from attendance declines even while going ahead with expansion projects.

"I would consider that a very risky business proposition," said Heywood Sanders, a professor of public administration at the University of Texas who is a leading critic of using taxpayer money to build convention centers.

He noted that the nation's biggest convention center, Chicago's McCormick Place, has seen attendance drop steadily in recent years, despite several expansions and costly upgrades. The Chicago Convention and Tourism Bureau reported that 2 million people attended events at the center in 2010, compared to 3 million in 2001. Convention delegates dropped to 890,000 from 1.3 million over that same decade.

Cuomo himself noted in a letter to New York legislators this week that many convention centers lose money, and he expressed doubt over the wisdom of using public money to pay for such facilities, saying it was "debatable" that they generate enough new tourism to validate the investment.

But he noted that, in this case, the building would be privately funded and operated.

"The state is not building anything. We are not spending public money on a convention center. Genting, a private entity, will take the risk of economic success," he said.

That argument rang true with Kathryn Wylde, president of the Partnership for New York City, an influential group of business leaders.

"There is only upside for the city and state," she said. "We have very little to lose by encouraging them."

As in Florida, Genting appears to be betting big that the state will eventually eliminate legal hurdles to expanded gambling. It paid $380 million up-front for the right to operate at Aqueduct for 30 years, and said it is prepared to spend billions of dollars constructing convention and exhibition space, as well as a theater and 1,000 hotel rooms, even without the gambling expansion it desires.

Clearly, Friedman said, the company doesn't believe the East Coast is saturated with either casinos or convention centers.

That said, it isn't necessarily keen for more competition. As part of its negotiations with the state, he said, the company is discussing a possible grant of exclusivity that could prevent another casino from opening "right in our backyard."

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