From Steve Norton, Veteran casino executive & Chairman/CEO at Norton Management LLC: Online gaming works in New Jersey because 95% of the State’s population lives closer to gaming in neighboring states, and have reduced their play in Atlantic City, in favor of casinos and race track slots in PA, DE, MD and NY.
New Jersey does well with online casinos, but its success will not translate the same for states that have commercial or riverboat casinos or race track slots in multiple locations statewide. Those that have tried, especially Illinois, that allows 5 Video Gaming Terminals at any licensed liquor establishment, have seen their 10 riverboats loose about the same amount of casino revenue, as over 25,000 VGT’s have added. But with a lower tax rate, the state has actually lost tax revenue, and a substantial number of casino jobs.
States have to decide their priorities, but those that want hundreds of $millions in taxes, $billions in construction, tens of thousands of jobs and millions of new visitors, need to carefully decide if new taxes from Online Gaming or VGT’s at various businesses, are worth risking the loss of construction, jobs, taxes and tourism, from existing gaming establishments.
Online Gaming has been good for Atlantic City casinos, but the probable $250 million in win, and $40 million in taxes this year, does not compare favorably to more than $2.5 billion in win and $200 million in taxes, that AC has lost to casinos in PA, MD, DE and slots at NY tracks.
7 years ago, the AC Press published an article from me, recommending that the Atlantic City casinos form a corporation and negotiate an agreement with Jeff Gural, to open a slot casino at the Meadowlands.
3 years ago, I wrote a position paper, on the same issue, pointing out that gaming in North Jersey would primarily take play from Eastern Pennsylvania casinos and the slot machines at Aqueduct and Yonkers race tracks, as 95% of New Jersey residents live closer to a PA, NY or DE casinos, than they do to Atlantic City.
AC has lost more than half of its casino revenue (from $5.2 billion to closer to $2 billion, if you remove free play from casino win), to more convenient gaming locations. And more casinos are on the way in Philadelphia, and New York State.
So if our shore resort is to survive, we have to find new markets, beyond the reach of the line run buses, that we started at Resorts in Nov. 1978, mid-week days only (with no coin, free play or complimentary meals). At one time these buses brought 14 million customers a year to AC, primarily mid-week, representing about 40% of our total visitor count. That number is now down by 90%, with a substantial number of our old Manhattan customers now busing to the Sands Bethlehem.
And more good news, is that the residents of East Brunswick (just over 9,000 persons) support a casino at the Meadowlands, live upland from the converted swamp; and should not experience the traffic congestion, that would be a problem at other North Jersey locations.
If the PA tax rates were adopted, slot and table tax revenues would probably exceed $450 million; which could mean something over $200 million for both AC projects, NJ Seniors and the disabled, with a little left over to help the horsemen. Compared to Aqueduct, the Meadowlands has superior access, not only to North Jersey’s 7 million residents, but is more convenient by highway to New York’s Staten Island, Orange Co. and especially Manhattan; by car, bus, limo and train, less than 15 minutes away.
The beauty of gaming here is the ability to attract mid-week convention/trade show attendees, plus the millions of visiting businessmen, staying at Manhattan hotels; and looking for a different kind of evening entertainment. Plus the Meadowlands includes other amenities, beside the Worlds leading Harness Race Track; including the Izod Center, the Met Life Stadium (home of the NY Giants and Jets), the site of the NJ State Fair and the ongoing construction of the stalled Xanadu Mall.
And a casino resort at the Meadowlands, with all of the population and nearby accommodations (nearly 100,000 rooms just in Manhattan), would not need 3,000 to 5,000 rooms, like the better L.V. Strip resorts, maybe 300 to 500 for its high level customers.
Casino gaming at the Meadowlands makes a great deal of sense for New Jersey, and could actually help Atlantic City, if part of the new casino tax revenues went to Atlantic City. And as a North Jersey monopoly, this casino could afford a tax rate like PA’s, allowing NJ to give as much as 50% of the tax to underwrite air service into AC International, and become a meaningful host to city wide conventions and trade shows. Meeting attendees would provide full rate room and function business, mid-week in the Fall, Winter and Spring, to AC casinos and to other South Jersey accommodations. Just looking at the Strip in Las Vegas, the convention trades have allowed the larger resorts to reduce their dependence on casino play from over 70% of total revenues to less than 35%; and profits from non casino departments now provide 74% of earnings, compared to the casino’s 26% (YE 6/30/2016).
Atlantic City is still dependent on the casino for 70% of revenues, and nearly 100% of earnings. Mid-week convention demand would allow AC resorts to develop profit centers from the convention, food and beverage and room departments (improving hotel occupancy’s and average room rates); while reducing the substantial discounting of mid-week rooms (as much as 90% compared to weekends).
New Jersey can reintroduce a referendum in 2018, to again look at gaming in North Jersey. This time hopefully the Legislature will pass as enabling bill, that spells out the minimum size and investment, the slot and table tax rates, preferably a single location, the tax beneficiaries, and whether AC casinos will have an exclusive time to bid as developer (either singularly or together).