Huge changes, challenges about to hit NJ casino market

ATLANTIC CITY (AP) — The ground is moving underneath New Jersey's casino market, which is facing the biggest changes and challenges since it began 37 years ago.

Gambling inside Caesar's in Atlantic City (William Thomas Cain/Getty Images)

The issue of whether legalized gambling should be expanded beyond Atlantic City is now front and center due to a proposal for a casino at the Meadowlands Racetrack, and Gov. Chris Christie's support of letting voters decide whether it should be allowed.

The proposal from Hard Rock and the Meadowlands comes as Atlantic City lost four of its 12 casinos last year. Speaking Thursday at the East Coast Gaming Congress, track owner Jeff Gural said the Meadowlands casino could provide $500 million a year in taxes, $200 million of which would go to help Atlantic City.

"My objective is not to destroy Atlantic City," said Gural, who owns two upstate New York racetracks with slot machines. "The only source of new money for Atlantic City is us. ... I agree that gambling in the north is bad for Atlantic City, but there already is gambling in the north. It's in Pennsylvania and New York. It's only going to get worse."

Gural's track would pay a 55 percent tax rate; Atlantic City's rate is 8 percent.

The state Constitution would have to be amended to allow gambling outside Atlantic City, but momentum for such a vote is growing. Christie said Wednesday night he supports holding a referendum as soon as possible in which voters would be asked whether to expand casino gambling.

But Atlantic City casino operators and southern New Jersey legislators say a Meadowlands track will devastate Atlantic City.

"All you're going to be doing is cannibalizing a market that is already oversaturated," said state Assemblyman Chris Brown.

Resorts president Mark Giannantonio said "it's surreal for me to listen to this and contemplate that we're discussing north Jersey casinos."

He said the harm that Pennsylvania casinos inflicted on Atlantic City was predictable.

"It is equally predictable that an expansion of gaming north of us -- something we can control -- will do more harm to this city than good," Giannantonio said. He said two or three more Atlantic City casinos might close if a Meadowlands casino opens.

Roger Gros, publisher of Global Gaming Business Magazine, agreed that New Jersey has already reached a casino saturation point.

"When you add a casino to any part of this region, you’re just shifting money from one casino to another; you’re not creating a new market, you’re not creating new gamblers," Gros said. "There is no cooperation when it comes to the gaming business across the region, it’s just competition."

Four of Atlantic City's 12 casinos shut down last year. Adam Rosenberg, managing director of Fortress Investments, said additional Atlantic City casinos will shut down in coming years, but would not identify them.

"I will predict that more will go, and that's a good and healthy thing," he said.

Gural said tax subsidies from his casino and possibly another one that could be built in Jersey City would provide $2 billion to help Atlantic City rebuilt itself over the next 10 years.

"And people are saying, `We don't want your $2 billion,"' he said. Referring to Revel, which closed last September after just over two years of unprofitable operation, Gural said, "We just saw a property that someone built for $2.4 billion that they couldn't give away."

Revel sold for $82 million from bankruptcy court, but is struggling to reopen. Its new owner, Glenn Straub, said this week the casino definitely won't reopen this summer, and it's doubtful its restaurants and nightclubs will open before Labor Day, either.

The state is also pushing its thus-far unsuccessful court battle to legalize sports betting, while trying to expand its nascent Internet gambling industry by seeking partnerships with other states. So far, only New Jersey, Nevada and Delaware offer Internet gambling.

David Matthau contributed to this report.

Categories: Money & Business