Report: North Jersey Referendum Could Cost Atlantic City Four Casinos

A recent report from Fitch Ratings said that up to four Atlanic City casinos could closes if voters authorize casinos in North Jersey.

An upcoming November ballot referendum that would allow New Jersey voters to decide if casino gaming expands beyond Atlantic City into the northern part of the state could have the unintended consequence of up to four casino closures. That comes from a recent report from Fitch Ratings.

While increased competition from nearby states such as New York, Pennsylvania and Connecticut has been cited as a major factor in Atlantic City’s decline over the last decade, further lost revenue for the embattled city could come from within New Jersey itself.

Increased competition from within NJ

Atlantic City is currently down to eight casinos, after losing four in recent years. Should the referendum pass, proposed locations for up to two new casinos would be the Meadowlands Racetrack and the American Dream complex, both in East Rutherford, and in Jersey City as well.

Right now, polls show voters are split on whether to allow the North Jersey casinos.

Jeff Gural, who runs the Meadowlands and has partnered with Hard Rock International Inc. for the casino proposal, said 14.6 million people live within 50 miles of his track.

“I think we’d do great,” he said. “We have the best location for a casino in all of America.”

The Jersey City proposal comes from developer Paul Fireman, who has not publicly disclosed information on his estimated $4 to $5 billion project.

AC casinos at risk

According to Fitch Ratings, casinos most susceptible to closure from potential new in-state competition are Trump Taj Mahal, Resorts Casino and Golden Nugget.

Fitch adds an estimated 25% decline in Atlantic City’s gross gaming revenue would negate any operating profit before factoring in the management fees of Golden Nugget, the most profitable among those three.

Fitch speculates Bally’s would be the most likely fourth closure. Caesars Entertainment closed down the Showboat Casino in 2014 although it was marginally profitable. Bally’s is currently the lowest-performing property among Caesars’ three remaining Atlantic City casinos.

Proposal attempts to minimize harmful impact to Atlantic City

Despite the expected negative effects more casino closures would have on Atlantic City, primarily in the form of further job losses, some concessions have been made in what would seem to be an attempt to recognize and minimize further harm to Atlantic City’s economy.

The current proposal gives Atlantic City operators priority in the application process and also includes a revenue share provision with Atlantic City.

There is speculation among financial analysts that the surviving properties could benefit from the closures and see performance improve, echoing what occurred after the four Atlantic City casino closures during 2014. Figures for 2015 showed an average revenue increase of just over 5%, which also factors in NJ online gambling revenue.

Peter Trombetta, an analyst with Moody’s Investors Service, believes the North Jersey casinos would do well, but not without consequences to others in the region. While potential harm to Atlantic City is the most pressing concern within the state, the new casinos could potentially also lure customers away from casinos in Pennsylvania, New York, Connecticut and possibly even as far south as Maryland.

New Poll Shows North Jersey Casino Referendum Is A Dead Heat

Voters appear to be split on whether to allow two new casinos in northern New Jersey ahead of a referendum in November.

Monmouth University’s Polling Institute added more fuel to the already raging debate about the future of New Jersey’s casino industry. The group just released the results of a poll in which voters were deadlocked on how they will cast ballots in a November referendum allowing up to two new casinos in North Jersey.

The poll: An even split on new casinos

The Institute detailed the results of its poll, in which it called New Jersey voters between May 23 and May 27 to ask them about the casino referendum. They collected data on a straight vote, as well as vote in relation to political party and region.

In terms of a straight-up vote untethered to political parties or regions, voters were in a dead heat: 48% of voters said they wouldn’t support the referendum and 48% said they would.

Patrick Murray, director of the Institute confirmed that the referendum is a toss-up right now.

“The fate of the casino expansion measure is anyone’s guess,” he said in the release. “The public does not express overwhelming confidence that adding North Jersey casinos will be an economic boon and there is widespread concern that this would hurt an already precarious Atlantic City.”

Splits by party, region on referendum

When polled by political party, Democrats were significantly more supportive than Republicans:

  • 53% of Democrat voters supported the referendum
  • 44% of Republican voters supported the referendum

In terms of regional support, North Jersey residents were most enthusiastic about the referendum. Here’s a breakdown of the results from North, Central and South Jersey:

  • North Jersey: 52% for, 42% against
  • Central Jersey: 45% for, 52% against
  • South Jersey: 42% for and 54% against

Polling shows support for city-led recovery

The polling took place during a volatile period in New Jersey’s gambling landscape. Gov. Chris Christie just signed an aid package for Atlantic City that gives the jurisdiction five months to get its finances in order. If it doesn’t, the state may take over the city’s affairs.

While the final outcome for AC is not determined, voters are relatively split on what should happen, as well: 51% said the state shouldn’t intrude on the city’s finances, while 42% gave Trenton the green light to intervene.

Predictions on the advent of North Jersey casinos range from a boon to Atlantic City to the possibility that three to five casinos could close.

Positive support of gambling on the decline

The Monmouth report also polled people on whether gambling was good for the state. Fifty-four percent of people who responded said they believe it’s good for the state.

While that statistic may be encouraging, the study pointed out that, back in 1999, nearly three out of four New Jersey voters said gambling was beneficial for the state.

In addition to sentiment about the November referendum, researchers wanted to know how people felt about gambling’s effects on Atlantic City.

According to the report, “38% say A.C. is actually worse off today than it would have been if gambling had never been allowed compared to 31% who say that A.C. is better of than it would have been without casinos.”