1. Tony Astran, APR · Master of Public Administration Final Project
The Impact of Casino Revenue-Sharing on Tourism Efforts in Niagara Falls USA:
Tony Astran, APR · Master of Public Administration Final Project
Advisor: Laurie A. Buonanno, Ph.D. · Second Readers: Frank V. Ciaccia, MPA; James A. Gold, Ph.D.
Introduction / Purpose Statement
Methodology
Niagara Falls USA is known worldwide for its natural wonder, and the local Seneca Nation of Indians created a casino downtown at the end of 2002, in part, to bolster tourism. The stakes were raised just three years later, as the Nation added a 27-story, 604-room hotel and amenities increased the casino’s footprint. Additionally, as part of a compact between the Seneca Nation of Indians and New York State, a portion of the casino’s slot machine revenue funnels directly to the City of Niagara Falls. Despite this, the verdict on the growth of Niagara Falls USA is still, to this day, debated. Does the presence of and revenue-sharing from the Seneca Niagara casino resort serve as a key impetus for tourism growth in Niagara Falls? Furthermore, is the amount of revenue-sharing dollars set at an appropriate level to make a positive difference?
As a byproduct of these concerns, I conducted an intensive case study to examine the growth of tourism in Niagara Falls USA relative to the Seneca Niagara casino resort during the years of 2006 through Qualitative interviews with the Niagara Tourism & Convention Corporation (known as Destination Niagara USA beginning in 2017, but referred to as NTCC for the purposes of this study) and city leaders, past and present, explored the linkages between the casino’s revenue-sharing dollars and the efforts of NTCC to promote the host community.
The casino industry itself continues to grow rapidly, especially for Native-owned casinos. According to the latest State of the States report by the American Gaming Association (2016), Native-owned casinos achieved a record year in 2015 of $29.9 billion in gaming revenues. The Association also cited a general willingness of tribes to enter into revenue-sharing agreements with state governments as a means to boost local communities (see p. 40).
At the heart of the importance of this proposed study is the question of how the revenue-sharing is allocated through state compacts, and what should the dollars be spent on. One could argue that some host communities have become dependent on the dollars. In the case of Niagara Falls USA, reporter Jim Fink in a Buffalo Business First article on June 14, 2013 described the head of the NTCC as being “ecstatic” that revenue-sharing payments were finally returning after being on hold for nearly three-and-a-half years. The Seneca Nation had held payments in escrow as it resolved a dispute over exclusivity rights with New York State. Fink reported: “Percy said because of the dispute, his annual marketing budget went from $400,000 down to just $60,000.”
For this in-depth qualitative case study, I conducted a series of face-to-face elite interviews with key individuals at NTCC and the City of Niagara Falls throughout September and October of To best capture the evolution of the 10-year span, I sought leaders in administrative, financial, and marketing roles during the years of 2006, 2011, and 2016.
I asked all interviewees for their perspectives on topics such as the revenue-sharing model, whether and how funds benefitted tourism marketing efforts, and how the very presence of Seneca Niagara Resort & Casino impacts tourism.
Results and Analysis
Interviewees expressed overall positivity in terms of growth in Niagara Falls USA’s tourism efforts and results. All pointed to growth in downtown, particularly with the opening of new hotels in recent years, and the development of Old Falls Street new 3rd Street establishments. Seneca Niagara itself also added to the City’s overall tourism repertoire. Interviewees also tended to describe the amount of 7 percent of the City’s revenue-sharing funds going to NTCC as fairly generous.
Despite these shared views, City officials past and present lamented missed opportunities to better manage its other funds from New York State, as improvements in other sectors of Niagara Falls may have influenced greater tourism marketing effectiveness. City officials also believed their share from New York State (25 percent) to be inadequate for further economic development. Finally, interviewees collectively viewed the Nation-State impasse of the early 2010s and a new, current impasse in 2017 as major barriers for continued tourism efforts, budget planning, and overall city vitality. All also agreed that more offerings of attractions are needed for further tourism sustainability.
Literature Review
With regard to Native American casinos, revenue sharing to host communities, and the impact on host community tourism marketing effects, there is virtually no research available that covers the nexus of these topics. Furthermore, very few studies exist on somewhat related topics, such as use of local funds or effects to economic development. Most studies about casinos tend to focus on problem gambling, local traffic, and resident attitudes towards the presence of a casino.
Only one in-depth study is available regarding these topics with respect to Seneca Niagara, but it was conducted before the addition of the hotel tower. The Center for Governmental Research and Gaming and Resort Development (2005) was commissioned by USA Niagara Development Corporation to provide an economic analysis of Seneca Niagara Casino’s impact to Niagara Falls. The report’s author, Kent Gardner, proposed that the City should receive more money from New York State to defray costs to the community created by the casino’s economic activity. He also concluded that “dedicating some of the funds to public safety, economic development and infrastructure improvements would be most consistent with how funds are spent in other communities” (p. 56).
Conclusions and Implications
The results of this case study show that a set level of tourism funding from casino revenue-sharing can have a positive effect on destination marketing efforts. Future casino resorts in metropolitan areas and near natural-wonder attractions can leverage the constructs of Niagara Falls USA’s revenue-sharing to determine revenue-sharing models of their own. Nevertheless, host community tourism agencies should be mindful not to depend on these resources being consistently available, particularly because of withholdings due to disputes between Native nations and state governments. Future follow-up research should include perspectives from: New York State; Seneca Nation/Seneca Gaming Corporation; leaders of other major tourist attractions; and, leaders of other major recipients of the Niagara Falls revenue-sharing funds.
A handful of in-depth case studies and economic impact reports were available for Foxwoods Resort Casino and Mohegan Sun in Connecticut, but with only limited reporting on revenue-sharing and tourism. Additional studies are available with respect to casinos and tourism, but were conducted on a broad level and did not include the topic of revenue-sharing. On the whole, what little literature is available points to Native casinos generally yielding positive benefits for tourism in host communities. And yet, as evidenced in the
case of Niagara Falls USA, funds available
for tourism efforts are certainly not
guaranteed to be consistent or timely.
References
American Gaming Association. (2016) state of the states: The AGA survey of the casino industry. Washington, D.C.: Freeman, G.
Center for Governmental Research and Gaming and Resort Development. (2005). Seneca Niagara Casino: fiscal & economic impact on Niagara Falls, NY [Report]. Rochester, NY: Gardner, K.
Fink, J. (2013, June 14). Casino deal replenishes NF tourism group. Buffalo Business First. Retrieved March 29, 2017, from