NEW YORK — A Malaysian company's plan to build a $4 billion convention center and big-time casino on the outskirts of New York City could be the biggest shot fired yet in a tourism arms race that has seen a growing number of Eastern states embrace gambling as a way to lure visitors and drum up revenue.
New York Gov. Andrew Cuomo announced last week that he would work with the Genting Group, one of the world's largest and most successful gambling companies, to transform the storied, but sleepy, Aqueduct horse track into a megaplex that would eventually include the nation's largest convention center, 3,000 hotel rooms, and a major expansion of a casino that began operating at the site in October.
The proposal came less than two months after once-puritanical Massachusetts passed a law allowing up to three resort casinos, plus a slot machine parlor, at locations around the state.
Ohio is poised to see its first commercial casinos open this year, after voters approved up to four gambling halls in 2009. Maryland's first casino opened last year, with more on the way. Pennsylvania's first casinos opened in 2006, and already the state is threatening to surpass Atlantic City as the nation's second-largest gambling market.
And in Florida, lawmakers are hotly debating a whopper of a bill that would allow up to three multibillion-dollar casinos, plus additional slot machines at dog and horse tracks. Genting appears confident the law will pass. It has already spent around $450 million to acquire waterfront property in Miami, where it wants to build a $3.8 billion complex that would include a casino, dozens of restaurants and a shopping mall.
States have embraced casinos, after years of trepidation about their societal costs, for two simple reasons: a promise of a rich new revenue source, plus the possibility of stimulating tourism.
"They are faced with tough decisions. They are in recession ... And we pay taxes far over and above normal taxes," said Frank Fahrenkopf, president of the American Gaming Association.
Last week alone, Genting's new gambling parlor at Aqueduct, now limited to 4,500 video slot machines and another 500 electronic table games, made nearly $13 million — putting the "racino" on pace to make $676 million per year, with 44 percent of that take going to a state education fund.
And that total is nothing compared to the $1.4 to $2 billion per year Genting predicts it would bring in at the huge complex it is planning in Miami.
Some experts, however, have questioned whether revenue bonanzas that large are realistic, and say states should be cautious about giving up too much to lure these projects. Competition for a limited pool of gambling and tourism dollars is already fierce, and recent years haven't been kind to casinos.
Nevada's larger casinos lost $4 billion in 2011, according to a report released this month by the state's Gaming Control Board, as the state continued to feel the effects of the global economic slump.
As gambling options have increased in the East, revenue has slid substantially at the pair of Indian tribe-owned casinos in Connecticut and declined by a dramatic 30 percent in Atlantic City, which has lost customers in droves to the new casinos in nearby Philadelphia, according to David Schwartz, director of the Center for Gaming Research at the University of Nevada Las Vegas.
That trend could deepen with the introduction of big-time gambling in New York and Massachusetts, and in the end result in a situation where few people need to travel to gamble.
And that could mean that the tourism promise of the casinos largely goes unfulfilled, as the gambling tables and slot machines are played predominantly by locals taking revenue from other parts of the economy, rather than out-of-state visitors bringing in new dollars, said the Institute on Taxation and Economic Policy, a Washington D.C. research group that advocates for progressive tax codes.
"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,