As Atlantic City's once thriving gambling industry deteriorates in the face of increased regional competition, some New Jersey lawmakers say the way to keep betting revenue in the Garden State is to authorize casinos near New York.
The legislation Assembly members Ralph Caputo, D-Belleville, Valerie Vainieri Huttle, D-Englewood and Raj Mukherji, Jersey City, introduced on June 1 seeks a constitutional amendment to authorize the legislature to establish three casinos in Bergen, Essex and Hudson counties.
Hard Rock International has already proposed a casino in Bergen County at the Meadowlands Racetrack in East Rutherford that its backers claim will generate $400 million in revenue annually for the Garden State.
A casino has also been proposed for Jersey City in Hudson County, and Newark Mayor Ras Baraka has pushed for his city to be considered as the Essex County casino site.
"For years our state has shelved the possibility of new gaming destinations to protect Atlantic City, but that strategy has proved ineffective because more and more dollars are going into New York and Pennsylvania and yet Atlantic City is still suffering," said Huttle. "The reality is that Atlantic City no longer has the monopoly on gaming unfortunately in our region."
South Jersey lawmakers aren't buying the argument.
New Jersey State Sen. Jeff Van Drew, D-Millville, and Assemblyman Bob Andrzejczak, D-Cape May, have voiced concerns about what new casinos would mean for Atlantic City, which is facing a $101 million budget gap and has been under the control of emergency manager Kevin Lavin since late January. Four of its 12 casinos were shuttered in 2014.
"There is only a given amount of market for casino gaming," said Van Drew, who has served in the state Senate since 2008. "Any kind of gaming market that Atlantic City has would be diminished."
Casinos comprise roughly 75% of Atlantic City's tax base with gambling revenues declining 46% from 2005 to 2014 due mainly to increased regional competition in nearby Pennsylvania and Maryland, according to a report issued in January by Moody's Investors Service. Van Drew said if new casinos open in North Jersey it probably will lead to the closure of two more Atlantic City gaming facilities, damaging property values and increasing unemployment.
"A significant amount of the casino business Atlantic City has comes from northern and central Jersey," said Van Drew. "It would definitely put a hurting on us."
Atlantic City Mayor Donald Guardian didn't respond to requests for comment on how casino expansion legislation would impact his city. The Republican mayor has made attracting non-casino businesses a high priority since taking office in January 2014. An 85,450-square-foot Bass Pro Shops Outpost store with 200 employees opened on April 15 and a new 16,000-square-foot development from BET Investments featuring upscale stores is slated to open soon next to the Boardwalk Hall sports arena.
Jeff Gural, chairman of New Meadowlands Racetrack LLC, argues that a casino presence in northern New Jersey would help draw visitors from other states and create competition with New York and Pennsylvania, which he said have taken $13 billion in gaming revenue from the Garden State during the last eight years. Gural said the $400 million in state revenue generated by his casino, which he hopes to open by the end of 2016, would allow New Jersey to return about $100 million for Atlantic City.
"There are already casinos in the north but they are in other states and aren't providing any benefit to Atlantic City," said Gural, who made a $120 million investment to the Meadowlands Racetrack in 2012. "The idea would be to direct some of that new revenue toward Atlantic City and benefit the city finances."
Caputo said he would favor giving first priority for 20,000 estimated jobs the three new casinos would generate to laid-off workers from Atlantic City's gambling facilities, 120 miles away. Lavin's emergency manager plan released March 24 includes having mediators work with casino representatives on solutions to aid the city's financial position and limited resources.
Rutgers University economist Nancy Mantell said the four Atlantic City casino closures last year led to 8,000 lost jobs, of more than 8% of the jobs in the city.
Mantell said the decline of casinos in Atlantic City has dragged down the state's overall growth in 2014 and isn't sure if expanding gambling facilities to the northern part of the state will help, since there is already major regional competition. She added that Atlantic City casino jobs have fallen steeply from a 1998 peak of 47,700 to only 25,600 in 2014.
"Now with only eight casinos there are still struggles and they aren't out of the woods yet," said Mantell, who is director of the Rutgers Economic Advisory Service. "What happens once you start drawing people away from new casinos?"
Mantell said a casino presence in North Jersey would make Atlantic City a "less obvious choice" for Garden State residents seeking gambling options and would provide more incentive for the city to change its brand beyond a gambling hub.
Florida developer Polo North Inc. and Stockton University announced plans on April 3 to transform Atlantic City beyond casinos with a $500 million Phoenix Project, but this vision is now in question after the college failed to purchase the former Showboat casino from Caesars Entertainment. Mantell said one drawing card Atlantic City may have when attracting casino traffic compared to the Meadowlands or Jersey City is beach access.
"Atlantic City should really be playing up that it is not just a place to go for casinos, but also the sun and the sand," said Mantell. "If [New Jersey casino expansion] pressures Atlantic City to diversify then that would be a positive."
