Recently, the American Gaming Association released its yearly report, State of the States 2018.
The report takes a look at the 24 US states with legal casino gaming for the 2017 calendar year.
The report highlighted the record revenue of $40 billion for the industry in 2017. It also shed light on the effect of competition on casinos, which will likely intensify in the coming years.
Gaming legislation conversations are on the rise in state legislatures across the nation. Increased gaming competition will most certainly impact New Jersey and Atlantic City, specifically. But how much?
Legislation expansion may erode NJ’s East Coast dominance
Atlantic City casinos reported earning $2.41 billion in 2017. That revenue figure is close to one-third of the $6.46 billion reported by Las Vegas casinos.
New Jersey has a population three times that of Nevada. With the launch of mobile NJ sports betting in the Garden State this month, some experts say it can surpass the sports betting revenue in Nevada.
In the end, though, Nevada isn’t the market that will impact New Jersey the most.
Competition becomes an issue for Atlantic City because of the growing East Coast markets that once funneled gamblers onto the Boardwalk. Those markets are:
- Baltimore and Washington D.C.
- New York City
- Pittsburgh and Meadowlands
Maryland, New York, and Pennsylvania, specifically will impact New Jersey’s gaming revenue as new casinos open and online gaming and sports betting spread.
Massachusetts could impact New Jersey’s gambling industry, too. Two new casinos in the Boston area — MGM Springfield (opening Friday) and Encore Boston Harbor — may pose stiff competition for Atlantic City casinos.
David G. Schwartz, director of the Center for Gaming Research at the University of Nevada, Las Vegas spoke to the Press of Atlantic City about gaming industry competition.
“The increasing competition from other markets in the Northeast is only going to get more intense. The biggest positive Atlantic City has in 2018 is that the city can boast two new properties (Hard Rock Hotel & Casino Atlantic City and Ocean Resort Casino), which might drive visitation. The city’s other casinos have the opportunity to create new attractions that will offer customers more reasons to return to Atlantic City.”
Experiences differentiate Atlantic City from the rest
Optimism on the Boardwalk is at a high compared to recent years.
What Atlantic City offers that its East Coast competitors do not is a complete destination experience. The Boardwalk, fine dining, several casinos, and plenty of non-gaming activities are attractive to couples and groups that want to get up from their slot machine occasionally.
“It’s important to remember that while individual operations do create competition, Atlantic City has the advantage of being able to offer a destination experience and insulate itself to some extent by offering a diversified product for multiple market segments,” said Rummy Pandit, executive director of the Lloyd D. Levenson Institute of Gaming, Hospitality and Tourism at Stockton University.
Offering a destination experience, however, may not be enough to battle with the spread of online casino gambling and mobile sports betting.
Are brick-and-mortar casinos a dying breed?
NJ gambling sites have been around since 2013 and now boast close to two dozen brands. Pennsylvania online gambling expansion will soon take off as well.
For all intents and purposes, NJ online gambling and sports betting are young markets. And yet they pack a punch when it comes to AC casinos. Sports betting and NJ online casino revenue helped push total gambling revenue above $300 million for the first time since 2010.
But as it continues to grow, it could have a negative impact on revenue of brick-and-mortar casinos.
Wayne Schaffel is an industry consultant and former casino executive in Atlantic City. He thinks online gaming will expand as competition erodes New Jersey’s tax revenue from gambling.
Now, there is a big push by most casinos to get online by the start of football season. It is logical to assume that the more gamblers wager online, the less they will visit casinos. This goes double as more states near NJ expand their gambling options.
Schaffel comments further:
“This will further undermine brick-and-mortar casinos, leading to a spate of closures over the next decade. This will be especially dire for New Jersey, which, in my opinion, has no real way to ever recoup the shortfall.”
A prediction of more casino closures is not the news anyone in New Jersey wants to hear. The wounds are still raw from a city weathering the effect of five shuttered casinos over the past few years.
Yes, the Boardwalk ushered two of those casinos back to life this summer. Now, time will tell if it is enough to ward off the competition and keep Atlantic City in business.