Along with picking a new president, New Jersey voters will also be tasked with making a second difficult decision this November, as a referendum question will ask voters whether casino gaming should expand beyond the confines of Atlantic City.
If passed, the casino referendum would end Atlantic City’s monopoly on gaming, and allow for up to two casinos to be built outside the city limits — with the most likely location being in north New Jersey, near the heavily populated border with New York City.
The plan is for part of the revenue generated by the new casinos would be used to bolster Atlantic City.
Referendum’s impact hotly debated
There are two schools of thought when it comes to the potential impact of casino expansion and what it means for Atlantic City.
Supporters of the referendum believe the subsidy earmarked for Atlantic City, along with the stipulation that its current casino operators would have the right of first refusal on the new licenses, is the only way to prop up the cash-strapped city and its shrinking gaming industry.
Opponents of the referendum believe, despite the subsidy, Atlantic City’s remaining casinos will be decimated by the new, well-located, in-state competition, and by the time the dust settles only three or four of Atlantic City’s casinos would survive.
Both of these points of view have their merits, but both are also problematic.
For the supporters:
- Fixing a problem by throwing money at it rarely succeeds.
- The new casinos create a chokepoint, cutting off one of Atlantic City’s visitor routes.
- Building so close to the New York border (a state that is currently in the midst of its own land-based casino expansion) will likely lead to a border arms race, as New York has already intimated it might approve a New York City-area casino should New Jersey erect casinos at its northern border.
And for the opponents the list is a little shorter, but no less problematic:
- The New York City area will eventually have a casino and it’s better to have it on your side of the border so the tax revenue ends up in your state’s coffers, rather than in the Empire State’s.
- Atlantic City is struggling and needs some type of relief, and thus far no viable proposal has been proffered.
What can AC casinos do
If the referendum is approved, Atlantic City casinos will need to rethink their business plans.
Actually, even if the referendum doesn’t pass, Atlantic City casinos should proceed as if it had, since expansion in the New York City area is inevitable, whether on the New Jersey or New York side of the border.
Double down on all aspects of online
When I say double down on online, I don’t mean increasing the size or scope of their New Jersey online gambling websites; it has to be bigger and more grandiose than that.
All along, Atlantic City’s online cheerleaders have seen potential beyond New Jersey’s borders, either as a regulatory hub for legal online gaming in the United States, or as a place for companies in the online gaming sector (from online casino and poker to daily fantasy sports and skill game developers) to locate their headquarters.
As one of the early adopters, New Jersey and its casinos are uniquely positioned to serve a bigger role than mere operators.
Reinvent their properties and the surrounding area
This is partly taking place now with non-gaming investments around the city, but not to the necessary level.
Atlantic City is not Las Vegas, and the local economy cannot rely on gaming. Considering its location, Atlantic City has the capability to reinvent itself as a resort town, with gaming being just one of the draws that brings tourist dollars into the economy.
Shopping, nightlife, and entertainment options (on-site and off-site) will likely be the key to the city’s turnaround, as will a return to the city’s past as a conference destination — but that will only happen if visitors have a reason other than gaming to come to the New Jersey shore.
Get together to sell Atlantic City
The casino industry has a tendency to be somewhat cutthroat, but at the same time it has also been able to join forces when needed and create the proverbial rising tide. The city’s casino operators need to do a better job of presenting a unified front rather than a collection of standalone properties all fighting for the same customers’ dollars.
Working in their favor is the New Jersey Division of Gaming Enforcement, which is, in my opinion, the most forward-thinking regulatory body in gaming. The DGE has given the city’s casinos several tools to use, from skill-based gaming and esports to daily fantasy sports, but now the onus is on the casinos to find a way to market these activities and bring visitors in.
Remove the patina of age
There is something to be said for history and nostalgia, but Atlantic City’s casinos are old, and they show their age. Unfortunately, coats of paint and new light fixtures aren’t going to solve the problem; the city’s casinos are going to need to reinvest millions into their properties if northern New Jersey casinos are approved.
The ones that do will likely survive. The ones that don’t … who knows?
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