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Always Turned On

Online gaming has the potential to restore some of the glory that has faded from Atlantic City lately

Distress flags are flying in Atlantic City, the city with the motto “Always Turned On.” And it is not because of the recent snowy weather. The proliferation of gaming in neighboring states and the resulting competition for gaming dollars is looming as the biggest challenge to Atlantic City’s future.

When Resorts opened in 1978, Atlantic City was the only game in town in the Northeast. Only two other places in the United States, Las Vegas and Puerto Rico, had casino gambling. Today, gambling has spread to all the states surrounding New Jersey, which means patrons don’t have to spend time and money traveling to Atlantic City or other gaming destinations to play. So, for the first time in its history, Atlantic City has fallen from theNo. 2 spot in slot revenue to No. 3, behind neighboring Pennsylvania.

New York has introduced video lottery terminals at some racetracks. One racetrack, Yonkers, is just a little north of the George Washington Bridgein northern New York City, and has over 5,000. VLTs have become so advanced that most players don’t even know or care that they’re not playing a slot machine. So the question becomes: Why would slot players, who comprise most of the gaming public, travel hours to Atlantic City when the same gaming action can be found a whole lot closer to home?

One reason could be to access non-gaming attractions, such as big-name performers and shows, luxurious spas, fine dining and shopping. The problem is that Atlantic City already offers these amenities, yet is still losing market share to neighboring states. As Albert Einstein observed, the definition of insanity is “doing the same thing over and over again and expecting different results.”

Finding the Answers
Clearly, then, to get a different result, Atlantic City must try something different, either by offering a new product or attracting an underserved patron base. Internet gaming-which is not presently legalized and regulated in any state-is something that can potentially do both.

Younger people, those in their 20s and 30s, have long been an underserved slice of the casino market, which has only recently begun to be tapped with casino concerts, nightclubs, pool parties and similar events. This group is obviously tech-savvy, and utilizes computers as an essential element of their everyday lives. Studies have also shown that this group likes to play all kinds of online games, particularly poker. In light of this, internet gaming is the perfect product to appeal to the younger player, and thereby to expand the Atlantic City market at a time when contraction is the prevailing trend.

Legislation proposed by state Senator Raymond Lesniak would achieve this result by authorizing Atlantic City casinos to offer internet wagering. Since the New Jersey Constitution mandates that all casino gambling take place in Atlantic City, the legislation requires that all gaming servers be located in licensed casinos. To comply with federal law, such gaming, which could consist of any and all authorized casino games, would be available only to players located in New Jersey.

A few years ago, such a restriction would have been difficult to enforce. However, following passage of the Unlawful Internet Gambling Enforcement Act in 2006, several online gaming companies determined for legal reasons to exclude players from the United States. To do so, they developed “geolocation” software that can reliably locate players’ computers and screen out players from prohibited jurisdictions. Similar technology can be used to block players located outside New Jersey.  

The bill would require personal account registration at an Atlantic City casino. A player would then be issued a user name as well as a password, assuring that the player would be the only one allowed to participate in the casino’s online games. This process would also serve to preclude any play by minors.

The number of existing online poker players in New Jersey has been estimated at over 200,000.  Still more online players prefer bingo, casino or skill games. If the Lesniak bill is enacted, New Jersey and its casino industry will be able to achieve the ultimate trifecta: offering a new product; expanding into a new market; and creating economic benefits such as jobs and taxes arising from online play.

Frank Catania is president and a principal in Catania Consulting Group, Inc. of New Jersey, a consulting firm with extensive experience in gaming issues. An attorney, he is of counsel to Catania & Associates, Law Offices, L.L.C. Catania served as assistant attorney general and director of the New Jersey Division of Gaming Enforcement; vice president and compliance officer, Players International; deputy speaker of the New Jersey General Assembly; partner in the law firm of Catania and Harrington; and counsel to Catania & Associates, LLC.

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