NEWBURGH, N.Y. — Broad grassy lots are all that remain of most of the shipyards and factories that once gave this city on the Hudson River its muscle and identity.  Boarded up rowhouses and vacant storefronts line the streets north of City Hall and Broadway, the city’s main thoroughfare. Drug dealers rule some corners. The sound of gunfire occasionally echoes through the streets.  The city’s major employers today are “eds and meds,” said Mayor Judy L. Kennedy — the community college and the hospital that replaced the brickyards, mills and machine shops.  Ms. Kennedy talks about the possibility of a Las Vegas-style casino nearby as if it were the economic salvation that has eluded her beleaguered city for half a century.  “It will provide 2,800 jobs for people who desperately need work,” she said, “and change the destiny of the valley. If we can pull this city out of the hole, we can pull up the whole mid-Hudson region.”  Ms. Kennedy offers a compelling argument. But her case also underscores a vexing problem facing New York State as it forges ahead with its ambitious plan to roll out Las Vegas-style casinos.  The Newburgh plan is one of six casino sites proposed in Orange County, a tantalizing location because it is 40 to 60 miles northwest of New York City with its thick, rich vein of tourists and residents.  But building casinos in Orange County would likely doom, or severely undercut, any proposals in counties farther north in the Catskills, where elected officials have long sought the economic boost from jobs and tourism that state officials argue a casino would produce.  At public presentations last week by 16 casino developers vying for the four possible licenses in the state, Kevin Law, a member of the Gaming Facility Location Board, acknowledged the state’s conflicting interests.  On the one hand, he said, the state wants to help distressed communities and promote tourism.  But then there is a cold economic reality: A casino close to New York City, which could draw on its 8.4 million residents and 50 million tourists, is likely to be the most successful in an increasingly competitive environment, especially with New Jersey now considering allowing casinos just across the Hudson River, in Jersey City and the Meadowlands.  Proposed Casinos in the Catskills and the Hudson Valley  Nevele Resort, Casino & Spa  “We can’t make a decision in a vacuum,” Mr. Law said. “We need to take into consideration what’s happening in other states.”  But at the same presentation, Mitchell Etess, chief executive officer of the Mohegan Tribal Gaming Authority, issued a stark warning.  “I’m going to tell you the facts,” said Mr. Etess, who is a partner in a proposed $500 million casino resort on the grounds of an old Catskill resort outside Monticello in Sullivan County. “If you put a casino in Orange County, there will not be a casino in Sullivan County that will be able to provide the stimulus for the type of growth that the region needs.”  Developers of two other casinos in Sullivan County have already dropped out of the licensing contest, complaining that the Orange County proposals have made it hard to get financing. That left Mr. Etess, and two other development groups with Catskill proposals.  One of those, a partnership of Empire Resorts and EPR Properties, has proposed a $720 million casino and resort outside Monticello, with an indoor and outdoor water park, golf courses, zip lines, cycling, hotels, shopping and restaurants.  But Empire Resorts said it would slash its own investment from $450 million to $277 million if the state grants a license in Newburgh or to either of two other sites in northern Orange County, and cut it even more, to $172 million, if a license is granted to any of the three sites proposed for southern Orange County.  The bitter competition between casino proponents in the Catskills and Orange County has set up a peculiar dynamic. The typical scenario when a community is hoping to lure a new business is to promote its best features: an educated work force, a good transportation network, beautiful scenery.  But the battle for casinos, jobs and tax revenues has become like a beauty pageant in reverse: communities are jockeying to put their worst foot forward to show just how badly they need a casino.  Proponents in Sullivan County say they have the highest unemployment rate of any surrounding county, 8.9 percent, a low per capita income level of $24,462 — compared to $30,397 in Orange County — and a declining number of businesses. The unemployment rates put forward do not always correspond to current state Department of Labor data, but it’s clear that both areas are in need.  For decades, the Catskills were a haven for vacationers, many of them Jewish, who sought a summertime refuge from their sweltering New York City neighborhoods. But beginning in the 1970s, the area fell out of favor and many of the hotels and bungalow colonies of the borscht belt collapsed.  Residents in the Catskills like to point out that Gov. Andrew M. Cuomo all but promised a casino there last November, when he flew to Sullivan County shortly after voters approved the state’s plan for full-scale casinos. “This is a game changer,” he told a cheering crowd, adding: “I think it’s going to fundamentally change the economy of the Catskills.”  Still, if a central argument for a casino is economic need, then a strong case could be made that no place in New York State is worse off than Newburgh, this bedraggled riverside city.  “It’s been 50 years of downhill,” Mayor Kennedy said. “We are in as desperate shape as Sullivan County ever dared to be.”  After the manufacturers moved out and the factories closed, Newburgh took on a hollow feel. Hundreds of buildings were leveled in the 1960s and 1970s, but promised urban renewal projects failed to materialize. A nearby mall sucked much of the life out of the city’s downtown shops.  More than one in four of the city’s 28,500 residents live below the poverty line. The unemployment rate is 8.7 percent.  Four years ago, Newburgh garnered national headlines as a tiny city overrun by gangs and violence after heavily armed law enforcement officers swept through Newburgh in a series of synchronized raids, arresting members of the Bloods on charges of murder, robbery, possession of firearms and conspiracy to distribute drugs.  Newburgh is still trying to live down its crime-ridden image. The city’s homicide rate is down, according to the police chief, Michael D. Ferrara, but there were still 30 shootings in the first six months of the year.  The proposed $670 million Hudson Valley Casino & Resort, which includes a 300-room hotel, restaurants, nightclubs and luxury shops, would actually be built in the town of Newburgh, which adjoins the city. The project’s backers say it would provide 2,858 jobs and $10.4 million in revenue for the town of Newburgh and Orange County.  Under an unusual revenue-sharing deal, the town of Newburgh agreed to provide the city of Newburgh with 15 percent of the casino tax revenues it would receive each year. The casino’s prospective owners, Rush Street Gaming and Saratoga Casino and Raceway, have promised to match that sum, which they say would provide a combined $2.5 million in annual revenue for the city, $1 million of it earmarked for law enforcement.  “We purposely selected the site because of the economic demographics and its geographic location,” said James D. Featherstonehaugh, an owner of the Saratoga Casino and Raceway.  Mr. Featherstonehaugh and others bidding in northern Orange County also make an argument calibrated to address the fears of elected officials in the Catskills: Their sites are less likely to have an impact on the fortunes of a Catskills casino than those in southern Orange County, they say.  The Newburgh location, which is off Interstate 87 well north of the Route 17 turnoff for the Catskills, is therefore much less likely to siphon off customers, Mr. Featherstonehaugh said.  Rather, he argued, the Catskills were much more directly threatened by the three proposals in southern Orange County; people traveling from New York City would have to pass Genting Group’s site in Tuxedo, Caesars Entertainment’s in Woodbury, and The Cordish Companies and Penn National’s in South Blooming Grove, on their way to the Catskills.  While the bidders and local officials make their arguments, and state officials weigh them, people who have already invested in Newburgh try to manage their own expectations.  The Hudson Valley project would be “a shot in the arm for the city, something even a factory couldn’t do,” said Vincent Cappelletti, a developer who started buying property in Newburgh 10 years ago. A building on Broadway that he bought when it was nearly empty is full now, but with social services agencies. “There are so many different jobs that a casino could provide, from entry level to hotel management,” he said.  Benny Papaleo, who owns a number of apartment buildings and an auto body shop, moved to Newburgh 25 years ago from Brooklyn because property prices were so low. He has been awaiting its revival ever since. He said a casino “would push us in the right direction.”  Some residents have heard these promises before. They remember talk of IBM moving into Newburgh, or of the expansion of nearby Stewart International Airport.  “I’ve seen developers come and go,” said Amber Zachary, who grew up here. “The big thing is jobs — jobs for natives of the city of Newburgh.”  Last November, she opened what has become a popular shop, Juice Headquarters. The brick building across the street is boarded up.  Asked about a casino, Ms. Zachary shook her head. “We’re always fed a dollar and a dream,” she said.  A version of this article appears in print on September 15, 2014, on page A17 of the New York edition with the headline: In Pursuit of Casinos, It’s Worst Foot Forward. Order Reprints|Today's Paper|Subscribe
Sullivan and Orange Counties see economic salvation for their depressed communities in casinos, but disagree about which is most in need.