On Monday, a State Senate committee held a public hearing to discuss a planned referendum, that if successfully passed would open the door for casino expansion in northern New Jersey.

Momentum in favor of gaming expansion has been building steadily since January, when Governor Chris Christie stepped in to arbitrate a compromise between sponsors of competing bills in the Assembly and House. Shortly thereafter, the now unified bill passed a senate committee by a margin of 9-2. This was followed two weeks later by its successful passage by the Assembly Judiciary Committee.

A second public hearing is scheduled for March 7 in the Assembly. Then, the two houses will take a final vote, and pending a three-fifths majority in each house, it will be left up to the voters this November to decide the bill’s fate.

Currently, smart money is on the referendum showing up on Election Day. However, it looks as though opponents of the bill aren’t ready to wave the white flag just yet, evidenced by vocal opposition from Atlantic City interest groups at this week’s hearing.

Whelan, others speak out

Former Atlantic City mayor Sen. James Whelan was among the most outspoken critics of the bill, pointing out that while northern New Jersey casinos will perform well for a time, they too will soon fall victim of the ails of cannibalization, pending casinos are built in nearby New York City.

“It will only be a matter of years before New York City has casinos in Manhattan or in the Bronx. What Atlantic City is experiencing now, North Jersey will experience at that time.”

Whelan was supported by Greater Atlantic City Chamber of Commerce President Joe Kelly, who made the bold prediction that two of the Atlantic City’s eight remaining casinos will be forced to shutter their doors in light of the launch of North Jersey casinos. Kelly’s prediction is not completely without merit, as in 2014, four AC casinos ceased operations.

However the closure of one or more AC casinos may not have as huge an impact on revenue as some might think. Despite the mass closures in 2014, AC gaming revenue only slipped from $2.74 billion in 2014 to $2.56 billion last year, strongly suggesting that remaining casinos are benefiting greatly from the consolidation of the market – although admittedly, the strong year-over-year growth of online gaming in NJ didn’t hurt.

Kelly also voiced concerns over how tax revenue will be funneled North Jersey casinos to Atlantic City. The current plan is a create a private equity firm that would allocate funds toward redevelopment and job creation, essentially taking the tough decisions out of local governments’ hands.

The most potentially impactful opposition came from billionaire investor and Trump Taj Mahal owner Carl Icahn, who told The Associated Press that his planned $100 million investment is contingent upon voters not approving the referendum. While the issue of gaming expansion is still open, Icahn will only dedicate $10 million to $20 million toward what he deems “crucial maintenance and other pressing needs at the casino.”

Icahn is also the owner of the Tropicana Casino, which at $280.1 million in 2015, produced more gross revenue than all but three Atlantic City casinos. Trump Taj Mahal was second to last at $180.3 million.

Are their concerns warranted?

Yes and no. There’s little denying that the opening of two north Jersey casinos – presumably in the highly populated areas of East Rutherford and Jersey City – will deny further business to Atlantic City.

However, a large segment of New Jersey and NYC residents already frequent casinos in nearby eastern Pennsylvania, most notably Sands Bethlehem and casinos located in and around Philadelphia. In 2015 alone, Sands and Parx Casino grossed north of $1 billion in gaming revenue. To a large degree, the damage has already been done.

In the most likely scenario, it’s these Pennsylvanian casinos that are going to be impacted the most by the gaming expansion bill. Going further, if in fact New York City opens casinos several years from now, Atlantic City is likely to lose the same business it would have lost to northern New Jersey, only it will receive none of the tax relief – relief that will likely be used in part to transform the city from a struggling gambler’s haven to a tourist destination.

Fighting against the referendum just seems to be delaying the inevitable, with none of the upside.

Robert DellaFave

About

Robert DellaFave is involved in the legal New Jersey online gambling industry in a number of ways. Not only does he contribute to a variety of online gambling publications focused on regulated US online poker and online casino sites, he is also a game designer.