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Go North, Young Man

Atlantic City has shot itself in the foot for 20 years. Let's hope local officials and politicians get it right this time.

Go North, Young Man

Anyone who has read this column on a regular basis knows that I got my start in gaming in Atlantic City, I still own a house there, and have the good of my adopted hometown at heart. So I hope those who don’t have a dog in this fight will allow me to voice my opinion on an issue that clearly only impacts Atlantic City. (Well, it has many other impacts, but my purpose is to address only the AC issues.)

As everyone knows, Atlantic City has been through a terrible exodus (a phrase the pastor of St. Nicholas Catholic Church in Atlantic City uses every Sunday when he’s soliciting contributions). This exodus, however, began with the casino customers who decided it was more convenient to frequent the casinos in Pennsylvania and Delaware than to drive at least an hour to Atlantic City. It continued then with more than 8,000 casino employees who lost their jobs last year as four casinos closed and others teetered on the edge of insolvency.

Gross gaming revenue in the city has been halved over the past seven years, dropping from $5.2 billion to around $2.7 billion in 2014, followed by a corresponding drop in gaming taxes. In New Jersey, gaming taxes are deposited in the Casino Revenue Fund, which largely funds prescription plans for seniors and the disabled, curing a thorny problem years ago that most states have yet to even address. But the decline in casino taxes has caused co-pays to rise and stress added to the lives of the affected.

So as a citizen of New Jersey, I want to see that fund restored to its former prominence, but with the state of Atlantic City, the only casino jurisdiction, as it is, that will never happen.

It can happen, however, if gaming is expanded to include North Jersey locations. Would this be bad for Atlantic City? Without any compensation for the Boardwalk town, undoubtedly. It would be the final nail in the city’s coffin.

But no one in New Jersey wants to kill Atlantic City. It is one of the big tourism draws to the state and continues to be to this day. Any casino approved in North Jersey must dedicate a portion of its revenues—in taxes, fees, whatever—to the betterment of Atlantic City. Already most of the “convenience” market has abandoned the Atlantic City casinos, preferring instead the Pennsylvania or New York casinos closer to home.

But Atlantic City still attracts visitors for the weekend getaways, special sports or entertainment events, meetings and conventions, holidays and other occasions. Money from North Jersey gaming could be used to beef up those attractions, offsetting any losses that would be suffered from casinos outside of Atlantic City.

There have already been several proposals to introduce casinos in North Jersey. Some Atlantic City politicians are resisting this effort, even though they know that Atlantic City and South Jersey are simply the tail that the North Jersey dog wags. Whatever North Jersey wants, North Jersey gets. Now is the time not to resist, but to bargain and get as much as they can for South Jersey. The longer they resist, the smaller will be the reward from something that is clearly inevitable.

All of the plans envision a much higher gaming revenue tax rate than you find in AC. Most are calling for a rate north of 50 percent vs. only 8 percent in AC (in addition to the 1.25 percent CRDA tax). So there will be plenty of money to go around in what should be one or two of the most successful casinos in the U.S. It would reinvigorate the Casino Revenue Fund, help to grow Atlantic City as a destination, and even contribute a few dollars to the state’s general fund.

Approving gaming in North Jersey would also give the state the jump on New York, which by law can’t consider casinos in New York City for at least seven years. It would also bring customers back from Pennsylvania casinos and short-circuit losses to any upstate New York casinos. It only makes sense for the state, and for South Jersey politicians to continue to oppose it is not only short-sighted but potentially suicidal.

Atlantic City has shot itself in the foot for 20 years. Let’s hope local officials and politicians get it right this time.

Now back to your regularly scheduled programs.

Roger Gros is publisher of Global Gaming Business, the industry's leading gaming trade publication, and all its related publications. Prior to joining Global Gaming Business, Gros was president of Inlet Communications, an independent consulting firm. He was vice president of Casino Journal Publishing Group from 1984-2000, and held virtually every editorial title during his tenure. Gros was editor of Casino Journal, the National Gaming Summary and the Atlantic City Insider, and was the founding editor of Casino Player magazine. He was a co-founder of the American Gaming Summit and the Southern Gaming Summit conferences and trade shows. He is the author of the best-selling book, How to Win at Casino Gambling (Carlton Books, 1995), now in its fourth edition. Gros was named "Businessman of the Year" for 1998 by the Greater Atlantic City Chamber of Commerce, and received the Lifetime Achievement Award from the American Gaming Association in 2012.

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