Betting on the Future of Gambling in New Jersey

During a season that’s brought Jimmy Buffett to Atlantic City to announce the addition of the music superstar’s Margaritaville mini-casino complex to the market, the future of gambling in New Jersey continues to take center stage for industry leaders and lawmakers in Trenton and Washington, D.C.

Over the past several months, state and national legislators have drafted more than a dozen bills to expand gaming in the state to include sports betting, gambling via the Internet and mobile apps, and wagering at horsetracks and at special events. Some of these activities are already being implemented at the state level despite violating federal law.    

As new casinos in New Jersey’s border states rapidly siphon off gamblers who until recently had few options outside Atlantic City for spending their dollars, elected officials are desperate to recoup fortunes that continue to dwindle at alarming rates.

This is despite the disappointing opening of the $2.4 billion Revel resort in May and the recent launch of the $150 million Atlantic City Alliance (ACA), founded to promote the city’s non-gaming activities. Over the year that ended in June 2012, Atlantic City's gaming revenue dropped nearly seven percent, according to the Atlantic City Convention & Visitors Authority, and in the same month, the official visitors center booked hotel rooms for 77 percent fewer nights than it had the year prior.

Meanwhile, Pennsylvania, which licensed its first casino in 2006, has emerged as the nation’s second-highest grossing gambling destination behind Nevada. And the nine-month-old Resorts World New York City in Queens, NY, which houses slots and electronic table games, celebrated a $57 million month in May, earning it a higher monthly profit than any other casino in the nation.

The company reports that the Queens property, casually known as “Aqueduct,” contributed $40 million to New York’s tax coffers in May, while the month prior, the combined total of tax receipts paid by the 41 casinos on the Las Vegas strip amounted to $30 million. At the same time, Atlantic City’s gambling properties paid a total of $18 million. Observers credit the population density around Aqueduct for the staggering gains.

Perhaps it is this dire financial portrait that has reframed the debate about legalizing new forms of gambling in New Jersey: no longer do lawmakers bother to challenge them on the grounds of moral ambiguity, their addictive allure, or their potential threat to the financial well-being of families. Now the arguments begin and end with economics. However, that does little to make the issue less controversial.

Firing the Starting Gun for Racinos

The most fervent -- and divisive -- movement is the one to end Atlantic City’s monopoly on gaming by spreading it to the state’s racetracks, with a push to construct a full-scale casino at Meadowlands Racetrack that would ostensibly provide a more convenient venue to New Yorkers wishing to idle away a few hours at the slots or tables.

While leaders in the northern part of the state float proposals though legislative channels in an effort to pry open the gates to these so-called “racinos,” Gov. Chris Christie and his southern allies flatly oppose any action they say would diminish Atlantic City’s chances for recovery.

Christie and Senate President Stephen Sweeney (D-Gloucester) have repeatedly refused to consider legislation before the termination of a five-year timeline to test the success of the ACA’s marketing initiatives.

Various bills to allow slots and video lotteries, plus others seeking to initiate study groups, pilot programs, and constitutional amendments for racetrack wagering have all stagnated in committee with Christie promising in his characteristic bluster at the announcement about the arrival of Margaritaville, “I can guarantee you that there is no way that if anybody in the Assembly or any place else puts some bill up to have gambling in any place other than Atlantic City, that it will go to die in the state Senate. Between the two of us [Sweeney and himself], Atlantic City is going to have exclusivity.”

But as Atlantic City’s prospects wither so do those of the state’s horse racing industry. The $30 million annual contribution from the Casino Reinvestment Development Authority (CRDA) to fund the ACA was diverted from a subsidy for racing and leaves the state’s four racetracks as the only ones within a five-state region to receive no state support.

Racetrack operators say New Jersey’s once-dominant horse racing and breeding industry has nearly collapsed without purses sizable enough to attract top talent, but insist they could recoup many of their losses with a boost from gambling revenue that would at the same time refill the state’s tax coffers.

Jeff Gural, who took over as operator of the Meadowlands in January after a decision by Christie to privatize the tracks, estimates he’d accrue $750 million annually from an on-site casino. He’s offering to pay the same 55 percent tax imposed on Pennsylvania casino operators if he receives the state’s blessing, which would, according to his projections, translate to $350 million each year for the state’s coffers. Gural expects Atlantic City casinos, taxed at a rate of 8 percent, to generate just $250 million for the state this year.

Though he doesn’t disagree that the ACA’s plan should be given time to succeed before legislators green-light racinos, he feels two years is enough to keep taxpayers and gamblers in North Jersey and New York waiting.

“The effect of having a casino at the Meadowlands would be minimal on Atlantic City,” said Gural. “Daytrippers want to go to the closest place and Atlantic City is 130 miles from the Meadowlands. It certainly makes sense to protect jobs in Atlantic City but racing creates jobs, too. And here at the Meadowlands we already have the infrastructure in place.”

“This is not an anti-AC position,” adds Assemblyman Ralph Caputo (D-Belleville), who has sponsored several bills to allow gaming outside of its current stronghold. “AC will be a destination and a resort but we need to offer convenience gambling to offset the unimaginable accumulation of revenue in Pennsylvania and New York. The only way to stop this is for locations across the state to co-exist.”

But Sen. Jeff Van Drew (D-Cape May), who objected to an Assembly Regulatory Oversight and Gaming Committee hearing that took place at the Meadowlands two weeks ago, is one of many South Jersey officials who don’t want to wager on those odds.

“There’s only so much gaming to go around,” he said. “Casinos at racetracks would cannibalize profits and reduce investment in Atlantic City.”

Continue reading on NJSpotlight.com.

NJ Spotlight is an issue-driven news website that provides critical insight to New Jersey’s communities and businesses. It is non-partisan, independent, policy-centered and community-minded.

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