New Jersey Considers Ending AC Monopoly on Casinos
In a move that is frankly long overdue, State Senate President Stephen Sweeney and Governor Chris Christie appear to be on the same page: both are willing to open up brick & mortar gaming across the state according to John Brennan of NorthJersey.com.
Atlantic City has had a monopoly on gaming in the state since a referendum passed in 1976. New Jersey became the second locale to legalize gambling in the United States.
The writing for casino expansion across the Garden State has been on the wall for quite some time (we first reported on this possibility back in January) but now it looks like it’s coming to a head.
After decades of prosperity – bolstered by the fact that they were the only game in town on the East Coast from 1978 to 1994, and even longer in the mid-Atlantic region– the Atlantic City gaming industry has been hit hard by competition from neighboring states coupled with the economic collapse in 2008.
In 2006 Atlantic City posted casino revenue numbers of $5.1 billion, by 2013 that number has dropped to $2.8 billion, and has fallen for seven straight years.
Now a shell of its former glory, the Atlantic City casino industry has already seen one casino close its doors (the Atlantic Club in January), another is scheduled to close in a matter of months (the Showboat in August), yet another is in bankruptcy for the second time in as many years (Revel), and still another is rumored to be a potential candidate to close as well (the Trump Plaza).
The industry has gotten so bad that in 2011 Governor Christie announced Atlantic City casinos would have five years to get their houses in order, or the state would have to consider expanding their gaming outside of Atlantic City.
While the five-year grace period was not official, most lawmakers, including the pro-AC Sweeney, were on board with it, perhaps feeling that online gambling would be the magic pill for AC’s woes.
But it now appears the state lawmakers have seen enough, and are ready to push forward with expanded brick & mortar gaming in the state.
Sweeney suggested that the matter could go to the public as a ballot referendum as early as 2015 – it’s too late to have it added this year, and there seems to be little doubt that it would pass.
So what would make these new casinos any different from the current crop?
Allowing casinos in other locales could kick start the struggling New Jersey gaming economy in several different ways.
The Return of In-State Gamblers
It could bring players who live closer to the border, and therefore closer to casinos in Pennsylvania or Maryland back into New Jersey casinos. This can be done by offering not only closer locations but also newer state-of-the-art properties.
For years New Jersey residents have been driving across state lines to gamble in casinos in Delaware, Pennsylvania and Maryland that are far closer to their homes than the Atlantic City casinos. By all accounts, they are far nicer. By spreading the casinos throughout the state New Jersey should be able to lure those players back, and keep the gaming revenue in New Jersey.
Community Revitalization
It could revitalize certain communities and create jobs.
Casinos such as the Atlantic Club and Showboat employ thousands of people, and mega-resort-style casinos could employ several thousand residents.
The Benefits of Competition
It could force the Atlantic City casinos to step up their game.
Not only would the Atlantic City casinos have to fight with out of state gaming, but new locations across New Jersey would also force them to improve or die, as the state would no longer rely solely on Atlantic City for gaming. The status quo would simply no longer be good enough.
More Tax Revenue
It will bring in new tax revenue and licensing fees as the casinos will likely by resort-style casinos that would be faced with higher tax rates and higher licensing fees.
Atlantic City casinos are currently taxed at a very low rate, a rate the new casinos would not fall under. Instead of tax rates in the 10% range they would be facing rates somewhere in the neighborhood of 50% tax rates.
Licensing fees and the compulsory infrastructure improvements would likely be higher as well.
