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NIAGARA FALLS, Ont. – Casino gambling made this city a boomtown, spurring hotels, restaurants and all the draws of a teeming tourism capital.

But the glitzy casinos that tower over Niagara Falls are now struggling to survive, threatened on all sides by a perfect storm of competition and changing times that has put their gambling monopoly to an end.

The future of the Canadian casinos could alter the tourism landscape in Niagara Falls – and pose a cautionary tale as New York State considers adding even more casinos to upstate New York.

“We’re getting beaten up on all sides,” said Jim Diodati, the mayor of Niagara Falls, Ont. “It’s very, very frustrating.”

What a fall it has been for Canada.

Profits from Canadian gambling facilities close to the U.S. border have dropped from $800 million to $100 million over the last decade.

And at resort casinos like the Fallsview and Casino Niagara in the Falls – built in the last 20 years – profits have dropped by more than $600 million alone.

No one factor is to blame for the decline, officials say.

But a series of unrelated factors has teamed up to hobble the casinos that once signified the city’s success.

Most obvious is the Seneca Niagara Casino on the American side, which has cut into Canada’s competition since the day it opened in 2002.

By that point, Canada’s Casino Niagara already had a six-year head start on attracting gamblers to its poker tables.

But the Senecas have used their tax-free advantages – and steady profits – to entice gamblers with free drinks and generous discounts at their 26-story hotel.

And for those guests who choose to get a room on the more developed Canadian side, the Senecas offer a $50 gambling voucher to draw them across the border.

“Seneca casinos are coming into our own backyard,” Diodati said, “and beating us at our own game.”

There’s one more factor: Senior citizen gamblers love the Seneca casino because you can light up a cigarette while playing the slots.

Value of dollar changes

But the Senecas aren’t the only reason the Canadian casinos are reeling.

The events of Sept. 11 took an international border that was relatively loose and tightened it considerably. Since then, a passport or enhanced license are needed for every trip to Canada.

Even worse for business was the sinking value of the U.S. dollar and the rising power of the Canadian dollar. The loonie was worth just 62 cents American when the Seneca casino was built but now is close to par.

The change has been great for Buffalo, with Canadians rushing to get the hottest deal each weekend at area malls and outlet stores.

But for each Ontario license spotted at the Walden Galleria, there’s an American counterpart who doesn’t bother to make the trip to Niagara Falls, Ont.

“That’s been a huge factor, especially for the day-trippers and people coming to the casino and the other attractions on this side of the border,” said former mayor Wayne Thomson.

The American casino has sucked profits from Canada for more than a decade, but one of Casino Niagara’s most threatening competitors lies a few blocks away.

Fallsview Casino Resort was opened in 2004 as the second Canadian Niagara Falls casino. Its resort hotel and performance venue distinguish it from Casino Niagara, which only features gambling and dining.

Business owners say the province has essentially neglected the first casino, with one saying he’s “surprised that it’s still open.”

It may not be for long.

New casino considered

Ontario is considering shuttering Casino Niagara – and other sites – in favor of a new casino in greater Toronto.

Diodati is fighting that move on the grounds that it would jeopardize the 4,700 casino jobs in Niagara Falls and possibly the city’s entire tourism economy.

“Any negative effect on the casinos sends a negative message to the businesses that set up on the periphery of the casinos in Niagara Falls,” he said. “They’re woven into the fabric of the tourism community – the hotels, restaurants are all tied together.”

That includes 30 high-rise developments that have crowded the property around the falls since the casinos were built, Thomson said.

Top government officials should remember the pre-casino days, he said, when Niagara Falls, Ont., looked a lot like Niagara Falls, N.Y.

“The community was in a recession, tourism was in decline, and there were absolutely no high-rise developments in the Fallsview area,” he said.

Business owners around Casino Niagara say they aren’t worried about the possible closure of the casino as long as the Fallsview stays open.

But if both were to close, they said the winter tourism component supported by gambling and the city’s two massive indoor waterparks would disappear.

“It used to be Sept. 1, and that was it” for tourists, said Steve Roussell, who manages a restaurant near Casino Niagara. “Now we’re a 12-month city.”

The signs already look ominous for Niagara Falls.

Assessment sliced

The government recently sliced the assessment of the two casino properties by more than half because of speculation that one or more of the casinos could close.

Casino Niagara’s taxable value – more than $130 million just five years ago – has been reduced to $36 million. The Fallsview land – valued at more than $560 million – has been reduced to less than $300 million, causing budget problems for the city.

“It is, in my opinion, unrealistic and unfair to the citizens of Niagara Falls,” said Thomson, the former mayor. “It has put a huge financial burden on the taxpayers for municipal operations.”

Some Canadian lawmakers see new, more profitable casinos as a way to help bridge a multi-billion-dollar budget gap.

The province says the decision is pure economics.

Gambling officials point to a stagnant yearly payout to municipalities – $2 billion – as proof that the gambling system needs to be reconfigured to grow.

They believe that number could be increased by rearranging where Ontario’s 33 existing slot facilities are located.

“The old philosophy was to build a casino and they will come,” said Diodati, the current mayor. “Now, it’s ‘build it where they already are.’ ”

Too many sites

Too many gambling sites are operating across the province, and many are in the wrong areas, gambling officials acknowledge.

There was “too much production in that area,” Ontario Lottery and Gaming spokesman Tony Bitonti said. “We’ve dealt with an overabundance of gaming.”

Some believe New York could encounter the same problem, now that Gov. Andrew M. Cuomo proposes at least three new casinos in upstate New York and possibly another in Niagara Falls.

Counting racetrack casinos and Indian casinos, New York now offers 17 casinos, and another 39 function in adjacent states, Cuomo said last month in Buffalo.

“The analysis and history shows that upstate New York presents a good market for casinos, including the Western New York region, and that taking advantage of this opportunity will help us bring much-needed jobs upstate,” Cuomo spokesman Matt Wing said.

But a new report has found that New York’s three Indian tribes with gambling halls saw a nearly 3 percent overall drop in revenues in 2011 at the same time tribes nationwide saw a 3 percent revenue increase.

Some believe those figures – coupled with Canada’s current troubles – should serve as a warning sign to New York.

“There’s only so many slices in a pie, and every time you take a slice out, it takes away from the whole picture,” Thomson said. “It’s just spreading revenues out and taking away from the overall picture. I think it’s a big mistake.”

email: cspecht@buffnews.com