Casino conundrum: Too many bets
Every place wants a piece of the action, including North Jersey - and A.C. may get hurt every time.
ATLANTIC CITY - The ground is moving beneath New Jersey's casino industry, which is facing its biggest challenges since being launched 37 years ago.
Whether legalized gambling should be expanded beyond Atlantic City is front and center following Gov. Christie's support for letting voters decide whether a casino should be allowed at the Meadowlands Racetrack in North Jersey.
The proposal by Hard Rock International and the Meadowlands comes as Atlantic City has lost four of its 12 casinos.
Speaking Thursday at the East Coast Gaming Congress, Meadowlands Racing chairman Jeff Gural said a casino at the track could provide $500 million a year in taxes, $200 million of which would go to Atlantic City.
"My objective is not to destroy Atlantic City," said Gural, who also owns two upstate New York racetracks with slot machines. "The only source of new money for Atlantic City is us. . . . I agree that gambling in the north is bad for Atlantic City, but there already is gambling in the north. It's in Pennsylvania and New York. It's only going to get worse."
Gural's track would pay a 55 percent tax rate; Atlantic City's rate is 8 percent. Hard Rock's chairman, James Allen, said the project would provide "a tremendous amount of cash at one time" for the state and Atlantic City.
The state Constitution would have to be amended to allow gambling outside Atlantic City, but momentum for a vote is growing.
Christie said Wednesday night he supports holding a referendum in which voters would be asked whether to expand casino gambling.
But Atlantic City casino operators and South Jersey legislators say a Meadowlands track will devastate Atlantic City.
"All you're going to be doing is cannibalizing a market that is already oversaturated," said Assemblyman Chris Brown (R., Atlantic).
That was the consensus at the gaming congress.
Eugene Johnson of Spectrum Gaming Group said that by the end of this year there will be 60 casinos in the Northeastern United States. That figure will grow to 65 by 2018, according to his colleague, Joe Weinert.
"There's not a politician in the land who is going to choose a tax increase when gaming looks so good on paper," said Wendy Hamilton, general manager of Philadelphia's SugarHouse Casino.
Asked if casino closings outside New Jersey are likely, she said nothing appears imminent, but "of course it's going to happen" if expansion continues at its current pace.
"Pennsylvania doesn't care what happens to New Jersey, and New York doesn't care what happens to Pennsylvania," she said. "It just can't go on forever. There's a finite amount of gaming revenue out there. We are in a very volatile time and we're in a frenzy of gaming expansion. It needs to stop."
Resorts Casino Hotel president Mark Giannantonio said "it's surreal for me to listen to this and contemplate that we're discussing North Jersey casinos."
He said the harm that Pennsylvania casinos inflicted on Atlantic City was predictable.
"It is equally predictable that an expansion of gaming north of us - something we can control - will do more harm to this city than good," Giannantonio said. He said two or three more Atlantic City casinos might close if a Meadowlands casino opens.
Gural countered that tax subsidies from his casino and possibly another one that could be built in Jersey City would provide $2 billion to help Atlantic City rebuild itself over the next 10 years.
"And people are saying, 'We don't want your $2 billion,' " he said. Referring to Revel, which closed last September after just over two years of unprofitable operation, Gural said, "We just saw a property that someone built for $2.4 billion that they couldn't give away."
Revel sold for $82 million from bankruptcy court, but is struggling to reopen. Its new owner, Glenn Straub, said this week the casino definitely will not reopen this summer, and it's doubtful its restaurants and nightclubs will open before Labor Day, either.
The state is also pushing its thus-far unsuccessful court battle to legalize sports betting, while trying to expand its nascent Internet gambling industry by seeking partnerships with other states. So far, only New Jersey, Nevada, and Delaware offer Internet gambling.