Borscht Belt Meets Rust Belt
Kelly of the Citiography blog explains that states often understand that gambling is detrimental to their citizens, so they locate casinos on the border, hoping to attract some other state's people:
"You want your residents spending their money on the mortgage and sending their kids to college instead. That's why casinos are usually located near state borders. The problem for New York State is that it's surrounded by legalized gambling, so most of the gamblers they get will be New Yorkers."
Thanks to Kelly Bennett