For photos from the Meadowlands contact

Thursday, April 4, 2013

Casino Follies

In West Virginia, the legislature has passed a bill which gives their racetrack casinos a break on their licensing fees as well as another bill authorizing a study regarding the problems the casino industry is having.  One casino, the racino at Wheeling Downs, has threatened to get rid of table games if they didn't get relief in their fees.

Well, to save the state of West Virginia some money, skip the study and let me offer you the main reason why your casino industry is having problems.  Casinos popping up all around your borders, thus costing your casinos revenue from residents of those states.  After all, why travel all that distance to your fair state when gamblers can stay local?  Think about it, it is the ultimate way for the casino industry to help everyone be green.  Reduce the greenhouse gasses out of state residents produced traveling across state borders by allowing them to lose their money closer to home and fill the home state's coffers with revenue.

Needless to say, the West Virginia situation is costing the state money but also impacts horsemen too.  Because of declining revenue at Charles Town, not only is the state losing money, but so is the racino.  What do declining revenues at a racino result in?  Reduced revenue for horsemen.  Legislation in the form of SB455 would reduce the minimum number of race days at the state's dog and horse tracks as well reduce purses.  The reason racetracks are pushing for this legislation?  The decline in revenue requires them to offer less racing dates in order to face economic realities.

But West Virginia is not going to take this sitting down.  They have authorized the building of a new casino to bolster their revenues.  Where are they going to put it?  Near the Virginia border in an effort to draw Virginians to West Virginia to take business away from casinos in Maryland.

Which brings us to New Jersey.  There is no fixing Atlantic City.  This is no slight against Atlantic City, but they wasted their window of opportunity to develop a true resort destination; an opportunity to insulate themselves from the poaching which is going on by the commoditization of gaming.  Heck, even Pennsylvania which was eating AC for lunch for several years is starting to hurt as a result of this poaching going on by other states.  In fact, any state which was ahead of the curve with casinos are now suffering declining revenues as a result of other states deciding they want their share of the pie.  Online gaming may help increase revenues for Atlantic City casinos, but it will never be the resort they hoped to become.

Where New Jersey fails to follow the common formula is their refusal to poach other states.  For example, the construction of a casino in Northeast New Jersey, likely the Meadowlands would have minimal impact on Atlantic City but would benefit the state coffers with increased revenue derived from the retention of gambling dollars currently flowing to New York state.  The state government argues they can't expand because it would hurt Atlantic City but the reality is nothing is going to help Atlantic City's physical properties.  Still a state which can use all the revenue it can get insists on the 'good neighbor' strategy which benefits New York state where they can't believe they good fortune.  New York has a friend in New Jersey.

True the Meadowlands stands to benefit if a casino was built at the racetrack, but more importantly, the state stands to benefit by recovering revenue it throws away as New Jersey residents cross the bridges to New York.  How in these days of tight budgets can any state afford to give money away?  Looking at the national landscape, what makes New Jersey think keeping Atlantic City the only brick and mortar casino area makes sense?

Delusion.  Atlantic City profits dropped 27% in 2012.  Regardless of what they do in the state, it is clear there are too many casinos in the Atlantic City market.  Some are going to have to close.

No comments: