If NJ Voters Approve The North Jersey Casino Referendum, What Happens Next?

Written By Steve Ruddock on March 30, 2016

[toc]When New Jerseyans head to the polls and cast their ballot for president this November, they’ll also be asked to vote on another issue that is of extreme importance to the state, whether or not to allow casinos to be built outside of Atlantic City in the Northern part of the state.

The referendum is far from a slam dunk, and is a veritable coin-flip at this point in time. The latest polling data taken in the summer of 2015 shows just 37 percent of New Jersey residents in favor of casino expansion beyond the borders of Atlantic City, while 56 percent disapproved.

Of course, these sentiments were voiced before an actual bill had been presented and before the money comes pouring in, as both sides begin laying out their cases.

History of gaming referendums in New Jersey

If we look at New Jersey’s historical voting record on gaming expansion, there is a good chance this measure will pass.

Even though it took two attempts to pass the state’s initial casino bill in 1976 – two years after voters rejected it in 1974 – New Jersey voters have since approved sports betting in 2011. The law was later blocked by a lawsuit filed by the NCAA and professional sports leagues – a fight that continues to this day.

Garden State residents also understand the value gaming brings to the state, even despite Atlantic City’s current travails. The state was also among the first to allow Internet wagering, and New Jersey online casinos are now at the forefront of the U.S. online gambling industry.

Basically, when it’s put to the voters, New Jerseyans will typically vote in favor of expanded gambling options.

Will it help or hurt?

Speaking of Atlantic City’s woes, there is a heated debate when it comes to the impact North Jersey casinos would have on Atlantic City. So, while the bill is being sold as a way to save Atlantic City and the state’s casino industry, but not everyone shares this point of view.

Trump Taj Mahal owner Carl Icahn said he would withhold his proposed $100 million investment if the referendum is adopted.

“Although I had planned to invest up to $100 million in the Taj, just as I made substantial investments at the Tropicana, obviously it would not be judicious to proceed with those investments while gaming in north Jersey is an open issue, and we will have to wait to see the outcome of those proposals,” Icahn said in early March.

Even the people who might benefit from continued contraction in Atlantic City seem skeptical of the plan, and the notion that expansion beyond AC is the remedy for the city’s casino industry.

Tom Ballance, the CEO of Borgata Casino, said the following about the proposed expansion bill’s effects:

“What will happen is that between a third and a half of the [North Jersey casino] revenue would come from Atlantic City, and when that happens another — probably three, maybe four places in Atlantic City will be forced to close.”

Atlantic City’s casino right-sizing speeds up

If Ballance is correct, Atlantic City could be down to just four casinos in the coming years. For most people this is a dire forecast, and a sign that North Jersey expansion is a bad idea.

But is it?

The closure of four casinos in 2014 is often portrayed as a negative, one of the worst eras in the city’s gaming history. And while there certainly were many negatives that came about from the 2014 contraction, ranging from job loss to shuttered buildings, it really wasn’t all bad.

Basically, sometimes you have to hit bottom before you can rise up again. While the closure of Atlantic Club, Revel, Trump Plaza, and Showboat sent the casino industry spiraling downward, it wasn’t the bottom. Even though the city lost one quarter of its casino properties – and the remaining operators are doing much better – the city still has too many casinos.

If North Jersey casinos become a reality, Ballance is likely spot on, and it will probably spell the end for several more Atlantic City properties.

This, in my opinion, would be a good thing. Instead of saving the city’s casinos, the focus would shift to the city itself, and bringing in new alternative tourist lures to boost the economy and create jobs.

Furthermore, it would force the city and the state to end their pointless attempts to make Atlantic City casinos great again, and would allow the leaders in the Atlantic City casino industry to thrive even more than they already are.

The remaining casinos would have the best of both worlds, with decreased competition and the ability to funnel revenue gained from the North Jersey properties into non-gaming entertainment options that could attract visitors.

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Steve Ruddock

Steve covers nearly every angle of online poker in his job as a full-time freelance poker writer. His primary focus is the developing legal and legislative picture for regulated US online poker and gambling.

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