CARS HOMES JOBS

Officials in other cities warn of pitfalls, failed promises by Rush Street

Sunday, June 8, 2014
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The company that wants to build a $300 million casino in Schenectady has made a lot of promises.

It will create 1,200 good-paying jobs. It will attract 2.8 million visitors to the area. It will generate $11.5 million for the city and county and $2 million for Schenectady schools. It will be a good corporate citizen and donate to local charities. It will be an economic engine for the next century.

But Pittsburgh has some advice for the Electric City.

“All the promises are just lovely, but are they willing to commit it to writing?” asked Mark Fatla, executive director of the Northside Leadership Conference.

Rush Street Gaming, chaired by Chicago billionaire Neil Bluhm, built a casino on Pittsburgh’s North Shore in 2009. The company is proposing to build a similar one with the same name

on Schenectady’s old Alco site along the Mohawk River.

If the Schenectady casino is anything like Pittsburgh’s, Fatla thinks it will fall somewhere between the extremes that anti- and pro-casino folks always cite. As the leader of the Northside community development agency, he has seen the casino do good things and bad things for the neighborhood. On the one hand, it brought nearly 1,800 good-paying jobs. On the other, Fatla says, he has started to hear reports of embezzling by gambling addicts and people losing their homes to gambling debts.

More concerning to him was Rush Street’s reluctance to honor a list of goodwill initiatives promised by a casino developer who had won the license for the North Shore site but had to abandon the project after financial troubles halted construction.

Fatla said the neighborhood didn’t think it was fair that the casino license was transferred to Rush Street without the goodwill agreement, which committed $1 million a year for three years. That money was to go toward housing development, revitalizing business districts and anything else that would mitigate the negative impact expected from a casino.

“They wouldn’t sign it,” he said, “so we threatened to appeal their license. They knew an appeal, even one they would eventually win, would cost them a year and millions of dollars, so they signed it about 15 minutes before the clock ran out. But we had to force them.”

That agreement ended recently, Fatla said, and he was disappointed when Rush Street declined to renew it. That doesn’t mean they don’t give back to the community in other ways, he pointed out. One day a month, casino employees repaint and restore buildings, plant trees and remove debris from the neighborhood.

Rush Street CEO Greg Carlin says each community welcomes them differently, but they all come to appreciate the benefits a casino brings. The company also operates casinos in Niagara Falls, Ontario; Philadelphia; and Des Plaines, Illinois.

“Casinos were new to Pennsylvania when we went there,” he said. “There were a lot of misconceptions and misperceptions about what it would be like and a lot of local opposition. Eventually, they were much more supportive and happy to have the casinos.”

Fatla said he was surprised to realize many of the worst fears people had about a casino fell far short of reality.

“Actually, the casino was built on a large surface parking lot that used to generate occasional break-ins, damage to cars, that kind of thing,” he said. “And in the first year of operation, the casino generated fewer crimes than the parking lot ever did. Imagine that.”

Since then, the Pittsburgh casino has racked up $261,000 in fines from the state gaming control board for underage gambling and $45,000 in fines for allowing in people who have been banned or placed on the state’s don’t-let-me-gamble list. It was also fined $10,000 for mailing promotional materials to 93 problem gamblers on that list.

Rush Street’s other casinos have racked up hundreds of thousands of dollars in fines for similar issues, but in every case, the casinos claim the violations were unintentional.

Most enticing to host communities has been the promise of revenue and jobs, which range from 1,200 employees at Philadelphia’s SugarHouse Casino to 1,800 at Pittsburgh’s Rivers Casino. The average salary is around $50,000, the median salary around $42,000, but local unions have alleged wages are too low for some staff — such as housekeeping wages of $8 an hour — and claim management threatens employees against unionizing. Carlin disputed these claims.

“I’m very proud of our jobs and the benefits we offer,” he said. “Our 401(k) is probably the best in the industry. Our team members get benefits that are better than any other casinos. We’ve been awarded Best Place to Work awards. I think our record speaks for itself.”

Rush Street’s casinos have generated exceptional revenues in some places, but not others. In Des Plaines, the Rivers Casino is the state’s most profitable, generating $24.7 million for the local community and $162 million for the state.

Its Pennsylvania, casinos have done less well. Critics claim the casinos offered rosy predictions of revenue that never actually came to fruition. In Philadelphia, for example, SugarHouse was projected to generate $320 million in gross revenue its first year but only generated $212 million. Analysts speculate that has something to do with competition from two nearby casinos outside of the city.

In Pittsburgh, the Rivers Casino generated $5.7 million in slots revenue for the county last year and $10 million for the city. That’s good, Fatla says, but not the great picture that was painted before the casino actually opened.

“The rosy projections did not come to pass,” he said. “The casino never met the projections that were made for it at the outset. That’s not to say they’re bad. It’s just that they were probably a little overinflated at the beginning to try to gin up some support.”

As Rivers Casino nears its five-year anniversary in Pittsburgh in August, Fatla reflected on whether the community is better off.

“We never asked for it,” he said. “It wasn’t a matter within the neighborhood’s control. So today, I wouldn’t say that people are excited they’re here, but I don’t think people are pissed off that they’re here.

“The reality is somewhere between the two extremes. They’re one more industry, one more employer, one more available partner in the market.”

 
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