Another Voice / Economic development
Buffalo casino would devastate hospitality industry
Updated: 08/22/08 7:13 AM
The Seneca Gaming Corp. is required to file quarterly statements with the Security and Exchange Commission. A close look at the most recent report provides a very disturbing view of the casino operations as they relate to the continued viability of the area’s hospitality industry.
Throughout the process to stop the construction of the proposed Buffalo Creek Casino (now declared illegal through a decision handed down July 8 by U. S. District Judge William M. Skretny) it has repeatedly been pointed out that the presence of the casino, with its proposed hotel and numerous food and beverage outlets, would surely drive many local hospitality establishments out of business. The casino can literally give away hotel rooms, food and beverage, retail sales and entertainment to those who “qualify” for free services due to their gambling losses. The system is called “Player Points” and is based on a small percentage of gambling losses being redirected back to the player as “points” to be spent on non-gambling services within the casino.
Receiving free or discounted services is very appealing to the individual gambler, but only when we look closely at the sheer magnitude of these free services can we appreciate that it would be impossible for local hospitality operations to compete with the casino’s non-gambling services.
The corporation currently reports (nine months ending June 30) that its three gambling establishments — in Niagara Falls, Salamanca and Buffalo — operated all their non-gambling operations, which include their food, beverage, retail sales, lodging and entertainment outlets, at a net loss of $59.3 million. If you factor in a portion of the $145 million in “promotion and general and administrative expenses,” that are not assigned to any specific department, that loss then approaches $100 million. Projected on a yearly basis, this will be between a $130 million and $140 million operating loss.
The corporation also gave away the equivalent of 71 percent of the hotel rooms that were occupied during the three-month period starting April 1.
It is inconceivable that any other business in Western New York could sell five of six product lines at a combined operating loss of more than $130 million a year and still thrive financially, as the casinos have. How could any local establishment selling food or beverage or hotel rooms or entertainment persuade customers to pay for a product that they can receive for free?
So citizens who care about the economic health of the city should be very glad that the currently existing gambling structure and the proposed Buffalo Creek Casino are illegal enterprises and destined to be shut down, because they would most assuredly have destroyed one of Buffalo’s most robust industries, the hospitality industry.
Steve Siegel is a professor at Niagara University’s College of Hospitality and Tourism Management and is responsible for much of the economic analysis of the projected impact of the proposed casino on the local economy.
