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Thursday, August 12, 2010

The Fallacy of Atlantic City

Another salvo in the North/South Jersey battle regarding the casino and racing industries has been fired by State Senator Lesniak who has challenged Donald Trump to propose a casino in the Meadowlands which would not only keep racing in the state but also benefits the state and the casino industry in Atlantic City. No doubt this letter will infuriate gaming interests in addition to the Democratic leadership in the legislature as well as Governor Christie.

One comment attributed to Trump in the Philadelphia Inquirer article is very telling.

There has been such a huge investment from Wall Street and international investors that if you took the focus off Atlantic City, there will be no more investment in Atlantic City.

This is just as much about protecting the investment bankers' investment as it does with maintaining jobs in South Jersey (to the detriment of North and Central Jersey).  The State is certainly not worrying about its best interests when the Governor is willing to let New York and Pennsylvania reap the rewards of New Jersey residents heading over the border to take advantage of casinos and racinos in those states; willing to lose valuable open space which will be developed into shopping centers and other commercial development.

Yes, the NJSEA is losing money.  However, this is after the state decided the NJSEA should close Giants Stadium before the stadium bonds were paid off, had them help expand Rutgers Stadium, build an Aquarium in Camden, build a new convention center in Atlantic City, buy Monmouth Park, give up some of their land for a glorified shopping center which may never open in addition to other items outside of their original mandate.  No doubt racing has not been as profitable as it once was but much of the NJSEA's deficit can b attributed to the political winds in Trenton.

Now the very same state which helped ruin the NJSEA is going to come to rush to the aid of Atlantic City?  The very same people who mandated money which was to be used for redeveloping Atlantic CIty be diverted to other causes?  Oh how reassuring this must be to the casino industry.  Only one problem.  Atlantic City had its opportunity to become a destination resort and it was squandered by the very casino industry asking for state help (despite demanding the state deny racing the very same help) and the state who failed to provide the support they needed.

Make no mistake.  Atlantic City's opportunity to become the gambling mecca of the East has come and gone.  Las Vegas was able to take advantage of its monopoly to become the gambling mecca of the United States.  Atlantic City had about twenty-five years to make itself a destination and failed to do so.  Since the first casino had opened in Atlantic City, casino gambling has transitioned from a unique product to a commodity.  Alabama, Arizona, California, Colorado, Connecticut, Delaware, Florida, Idaho, Iowa, Illinois, Indiana, Kansas, Louisiana, Michigan, Mississippi, Minnesota, Missouri, Montana, Nebraska, Nevada, New York, North Carolina, North Dakota, New Mexico, Oregon, Oklahoma, Rhode Island, South Carolina, South Dakota, Texas, West Virginia, Wisconsin, Washington, and Wyoming all have one form of casino gambling or another.  Are these people going to travel to Atlantic City for a weekend of gambling?  Of course, not.  

But to be fair, the vast majority of Atlantic City's customers came from the surrounding states as well as New Jersey itself.  What about these people?  Pennsylvania and Delaware have tables and slots.  New York has slots (but you can expect table games there within a few years).  Are these people going to travel to Atlantic City?  What about New Jersey residents?  Is someone who lives within an hour and a half to a casino in Pennsylvania or a half hour to a slot parlor in New York traveling three hours to get to Atlantic City?  Certainly not the convenience gamblers.

Sports gambling, if it gets legalized will be the next great savior for Atlantic City?  Are we to think these other states which offer casino gambling will let Atlantic City have the monopoly on the East Coast?   

Both industries are in trouble and like it or not, their futures seem to be intertwined.  There will be a shakeout in Atlantic City; it is inevitable.  They future of the gaming industry in New Jersey depends on the expansion of gaming.  Horse racing needs gaming and it horse racing is the path for expansion of gambling in the state.  Wouldn't it be better for all involved, including the state to come up with a way to work together instead of trying to kill each other off? 


The_Knight_Sky said...

This post is spot-on.

A good way to gauge the future viability of Atlantic City is the amount of construction/capital improvements that is now going on.

How many of these casinos are investing in the future by
upgrading their holdings?

If they don't have the requisite faith in their future growth, what is the point of trying to "save" Atlantic City as a resort destination?

Pavel said...

It's funny that the guy who is behind this site is a "former" owner. There's a reason why there are a lot of "former" owners. Especially in New Jersey.

Pacingguy said...

As I said back when I first started this blog, that my being a former owner allows me to have a unique perspective. I know what is involved in being in harness racing, yet can be impartial.

For the record, I never raced in New Jersey.