Ever since New Jersey legalized the casino industry in 1976, Atlantic City has had a monopoly on the industry as casinos were not allowed in any other cities. While this model has worked well for New Jersey in the past, the last couple of years has the Atlantic City’s casino industry dwindle and resulted in the closure of four out of the twelve casinos located in the area.

As a result, lawmakers in New Jersey have been pushing for casinos to be setup outside of Atlantic City for the first time and a new bill has been proposed to construct two casinos in North Jersey. The bill gained momentum on the 14th of March after it was approved in both the state senate and the state assembly.

The SCR1/ACR1 bill got a 34-6 vote in the state senate and a 54-15 vote in the state Assembly with three legislators absent from the voting process. There were initially some concerns that the bill would not get past the state Assembly as some legislators believed that setting up two new casinos in North Jersey would cause even more harm to Atlantic City’s struggling casino industry.

Now that the bill has been passed in both houses, it will be left to the citizens of New Jersey to vote on the November 8 ballot and decide if they want to move casinos outside of Atlantic City. The bill, which is supported by Assemblyman Ralph Caputo (D-Essex), proposed to send $200 million in taxes from each of the new casinos to Atlantic City.

Caputo believes that the two new casinos would help to develop North Jersey by creating thousands of new jobs and generating significant revenue which can be used for further development. The two new casinos would also put North Jersey on the map for its entertainment facilities and help boost tourism numbers. Those in favor of moving casinos to North Jersey also believe that it will help the garden state to compete with casinos in neighbouring states.

Not everyone is in favor of the new bill though. Assemblyman Chris A. Brown (R-Atlantic) voted against moving casinos outside of Atlantic City and believes the move will not help Atlantic City in any way. In a statement, Brown said “It’s only going to increase and speed up competition we don’t have now. If we build in an over-saturated market, they will not come.”

There are also legislators like Assemblywoman Holly Schepesi (R-Bergen) who are not happy with all of the details proposed in the new bill especially on how the $200 million should be utilized. Schepesi does not want the money to go to Atlantic City but wants it to be spent on other urgent matters such as the state’s Transportation Trust Fund which is running on empty and increasing pensions.

One Response

  1. Steven Norton

    Assemblyman Ralph Caputo is correct that one or two casinos in North Jersey, will help the State and could prove beneficial to Atlantic city. What AC needs to do with its revenue share is to underwrite commercial air service into AC International, that would make it possible to reach new markets and easier to promote the convention/ trade show markets, like the strip resorts in Las Vegas. The meeting trades primarily meet mid-week, and usually not in the summer months, a perfect fit for AC resorts. And the attendees pay rack or posted rates for rooms and meals, no discounts, comps or free play required. This kind of business would substantially increase room rates, turning that department into a meaningful profit center; while greatly reducing the discounting and the costs of promotional allowances, needed to induce mid week casino demand. And even though many conventioneers do not gamble, many do, and the profit margin on these customers is greatly enhanced without the need for free play and other freebies.

    With casino gaming now closer to 95% of AC’s previous markets, we can no longer expect 10 to 20 casino visits a year, like in the past, and most will now come on weekends, when our casinos already do good business. And our old line run buses from Manhattan and North Jersey, are now going to Sands Bethlehem. We need air service bringing persons to Atlantic City and South Jersey, not the kind we now have, providing cheap flights for South Jersey and Philadelphia residents to various Florida resort.

    But Caputo’s suggested tax rate of 66% will not work next door to Eastern Pennsylvania casinos, that pay a 55% tax on slots and 14% on table games. Maryland introduced a 67% tax on slots, but MD had the large Baltimore/ Washington population to count on, with the closest competition in West Virginia and Delaware. North Jersey casino customers have Sands Bethlehem and the Poconos nearby, providing tables and slots, that are also convenient to citizens of Manhattan and Staten Island. A slightly higher tax rate than PA, and a required $1 billion investment, might be acceptable if only one license is at stake. But even the PA tax rate would torpedo the $4.6 billion Jersey City proposal. The million dollar question is how much will Atlantic City and Pennsylvania operators spend against the referendum. In Maryland we saw two companies, spend nearly $100 million on the casino referendum involving Prince George Co. (metro DC). A single casino in North Jersey could provide $100 million or more in support of Atlantic City, and possibly exceed the EBITDA impact that the North Jersey casino has on AC casino resorts. But AC has to find a way to secure air service into AC International, and open the resorts to new markets, and expand the reach for the convention/ trade show business. And in my opinion restrict North Jersey to a single casino at the Meadowlands.


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