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Atlantic City's Future Depends On November Ballot Question

State Voters To Decide If Casinos Should Come To North Jersey

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A November referendum will decide whether Atlantic City will lose its decades-long monopoly on casinos in the Garden State.

Back in 1978, when Resorts Casino Hotel opened, it was the first legal casino outside of Nevada in the United States. These days, there are more than 40 casinos and racinos in the Northeast, with Pennsylvania now possessing a larger casino gambling market than New Jersey. Gaming win in Atlantic City has been slashed in half over the past decade, from a high of more than $5 billion in 2006.

The east coast gambling Mecca was poised for the Las Vegas-style growth seen in the 1990s, but the Great Recession came and so did beefed up gambling industries from neighboring states. Superstorm Sandy in late 2012 also dealt a major blow to Atlantic City. To make matters even worse, New Jersey has engaged in a costly battle to bring sports books to Atlantic City, but the courts have sided with the major professional sports leagues and the NCAA.

Atlantic City casinos tried to broaden their appeal as the competition loomed, but it ultimately didn’t work. Four of the city’s then 12 casinos closed in 2014, with another—the Trump Taj Mahal—set to close this year. Revel, a $2.4 billion casino that never turned a profit and required state help to open in the first place, looked like it was going to reopen this summer, but now the developer is threatening to walk away thanks to what he sees as government red tape.

Experts believe that Atlantic City could be left with just four casinos should north Jersey casinos be approved. In addition to the Taj Mahal, the city’s three smallest casinos in terms of gaming win, and likely most in danger, are Resorts, Golden Nugget and Bally’s.

The future for Atlantic City, which flirted with the idea of bankruptcy before state lawmakers passed a rescue package, could also be threatened by $1.5 billion worth of investment in new Empire State casinos. New York estimated that its residents spend $1 billion each year at out-of-state casinos, a lot of which goes to Atlantic City.

The Philadelphia area will also soon get another casino.

The Nov. 8 vote in New Jersey will officially decide if two additional casinos in north Jersey should be allowed. Atlantic City casinos licensees would be given six months to draft proposals for casinos in north Jersey with at least a $1 billion investment. North Jersey could be especially attractive for MGM Resorts, which failed in lobbying for a casino in New York City. If no Atlantic City operator submits a proposal under the state’s guidelines, casino operators outside of New Jersey could submit proposals.

According to ballotpedia.org, the question that voters will see reads:

Do you approve amending the Constitution to permit casino gambling in two additional counties in this State? At present, casino gambling is allowed only in Atlantic City in Atlantic County. Only one casino in each of the two counties would be permitted. Each casino is to be located in a town that is at least 72 miles from Atlantic City. The amendment would allow certain persons to apply first for a casino license.

The state legislature was tasked with coming up with the proposal, and it has the blessing from lawmakers (85 percent in the Senate and 76 percent in the Assembly), as well as Gov. Chris Christie. He said recently that he will campaign for the approval of north Jersey casinos. Opponents include the mayor of Atlantic City, the New York Gaming Association, unionized workers in Atlantic City, among others. Critics point out that jobs will be lost in economically depressed Atlantic City, an area with unemployment and foreclosure rates among the highest in America. The city also $550 million worth of debt and a $100 million budget deficit.

Atlantic City Mayor Don Guardian told the Associated Press this past spring that “there will be devastation” if the state’s constitution is amended to break the casino monopoly.

Even before the referendum became official, Hard Rock International and the Meadowlands Racetrack in East Rutherford agreed to partner for a casino proposal. Deutsche Bank estimated that the casino could generate $500 million a year in gaming revenue. Jersey city has also been speculated as a casino location.

A tax rate for the north Jersey casinos hasn’t been hashed out yet, but there reportedly are discussions to make it higher than Atlantic City’s eight-percent tax on gaming revenue. Some of the tax revenue could go to bolster Atlantic City’s remaining casinos.

According ballotpedia.org, an average of the top polls done so far has revealed that the ballot question could go either way, with a slight advantage right now going to the opposition.

While the New Jersey casino vote is by far the most noteworthy for the American casino gambling industry, there are other important referendums happening elsewhere. Five other ballot questions are: Massachusetts authorization of a second slots-only casino, Rhode Island’s approval of the Twin River Casino in Tiverton, two horse track regulatory issues in Nebraska and Arkansas casino legalization and regulation.