Andrew Yang is seeking to be elected mayor of New York City. Yang has no political experience, although he has campaigned for public office once before. In November 2017, he filed to run for president of the United States, leaving the race in February 2020. Yang is not rich, nor is he well-known nationally. He graduated from law school, but only practiced law for “the worst five months of my life.” He is usually referred to as an entrepreneur, author and now of course politician. He has written two books; the second, The War on Normal People, contains his political philosophy, worldview and a prescription for solving a major challenge of our time, the widening economic divide.
Yang sees society as divided into two categories, “normal people” and “the other people.” Normal people are all those who perform routine tasks: factory workers, transportation, food service and white-collar administration. The others work in law, medicine, finance, consulting, technology, and academia in one of six major cities. The second group is inheriting the Earth, while the normal people are being overtaken by technology and automation—marginalized and losing their jobs and any hope of a better future.
Former presidential candidate Andrew Yang, a candidate for Mayor of New York City/via Shutterstock
The book is not about casinos, but Yang does mention them. “One thing that has surprised me is that many of these places — Baltimore, St. Louis, New Orleans, Detroit, Cleveland — have a casino smack dab in the middle of their downtown. I’ve visited some of them on a weeknight and they are not encouraging places. Most of the people there do not seem like they should be gambling.”
The people he saw at the casinos, who he thinks shouldn’t be there, are the normal people. The other people make at least $200,000 a year and can afford a night out to play the slot machines, blackjack or craps. Yang’s book and his political campaigns advocate protecting and helping the normal people and clearly, he does not believe casinos do either.
So it came as a bit of surprise when as a mayoral candidate, Andrew Yang suggested building a casino in New York City. He said, “That casino would generate so much money it would be bananas. If the city could get that in place and harness some of that, that would be one of the engines of recovery.” Yang thinks most of the money gambled in the casino would come from tourists and people who would have spent that money in Connecticut or New Jersey (no mention of Resorts World at Aqueduct Racetrack near JFK International Airport in the New York City borough of Queens). He is not specifically targeting the normal people of the city.
It is at this point that Yang becomes a politician. He is looking for money to fund his pet plans and believes a casino could provide it. His spokesperson estimated $1.5 billion in licensing fees and $900 million in taxes annually. These estimates are typical of political rhetoric, i.e., inflated and unrealistic. It might be possible to find companies willing to pay $10 million or even $100 million in licensing fees, but $1.5 billion is a bit steep for any gaming company, though maybe Microsoft, Google, Amazon or Facebook might be interested. Except those mega-companies don’t build buildings or restrict their customer base to one small geographical area, do they?
The tax projections are, likewise, quixotic. Nevada collected $711.3 million in gaming taxes in 2018 from more than 400 casinos. Pennsylvania has the highest gaming-tax rate of any state. In 2020, the Keystone State collected $700 million in taxes on $2.6 billion in gaming revenue. In 2017, the best year for gaming in Pennsylvania, the state collected $1.1 billion in taxes. For a casino in New York to pay $900 million in taxes, it would have to generate between $8 billion and $10 billion in gaming revenue.
Nevada casinos generated $12 billion in revenue in 2019. Las Vegas alone gets over 40 million visitors a year and generated $6.5 billion in gaming revenue in 2018 and 2019. Pennsylvania’s casinos produced $3.2 billion in 2017, its best year. Resorts World Casino New York City generated $625.8 million in revenue from 5,500 slot machines, $322 a day from each one. Those are big numbers and to get to Yang’s predictions, a casino would have to generate many times that amount of activity. It is a tall order.
Yang has fallen into the trap that often snares politicians: letting their desire to fund pet programs outweigh their critical analysis. Yang appears to be an honest person, with a political agenda of doing good according to his values. He does not seem to be seeking personal riches or public acclaim. He believes that the plight of his normal people is dire and the government should step in and help them. He advocates paying everyone a universal basic income of $1,000 per month. And whether it is administered by the federal government or the city, it has to be funded. Who can fault him for looking for a golden goose? Sadly for Andrew Yang’s plan, gaming is not a golden goose.
In 2021, there is enough data to make realistic projections on the potential revenue of any casino in any city. New York City would be the best location in the country. But it would not be better than Macau or Singapore. Nor could he expect to levy a tax more onerous than Macau, Singapore, or Pennsylvania and still attract investors and developers. Macau, after all, dangled exclusive access to 1.4 billion Chinese before prospective casino developers. New York City has eight million people. Andrew Yang might make a good mayor. However, it’s a long distance between a theoretical political philosopher and a day-to-day mayor of the nation’s largest city.
A casino in New York would attract the best of casino companies. They would be willing to invest billions. The casino would generate breathtaking revenues and pay lots of taxes. It would employ thousands of people. However, it would not rescue normal people from automation and it would not solve the city’s problems.
