Most places, it seems to be ALL-bany by preference. It really depends WHICH Albany and who’s saying it, though. Different towns prefer different versions, and different accents will make further variations.
NY, CA, and OR Albanies are ALL-benny or ALL-bunny, with a slight second stress on the -ny. GA’s Albany is sometimes ALL-benny, somtimes allBENny.
http://en.wikipedia.org/wiki/Albany lists about 40 different Albanies, in different parts of the world; an Australian isn’t going to pronounce it quite the same as a New Yorker who also won’t pronounce it quite the same as a Georgian.
Merriam-Webster has sound files for both ALL-bany and AL-bany, but it gives the ALL-bany version in its pronunciation key.
|Sources: http://www.m-w.com/dictionary/albany,http://en.wikipedia.org/wiki/Albany, http://albany.georgia.gov|