Andrew Zarnett Cited Atlantic City Casino Closings and New Jersey’s Own Budget Shortfall
Duetsche Bank, the leading German financial institution, published a report last week stating that the best course forward for New Jersey was to build one or more casinos in North Jersey. Deutsche Bank, which has had recent first-hand knowledge of the land-based casino gambling industry, suggested several factors went into its suggested course of action.
The financial institution pointed to the recent closing of 4 Atlantic City casinos and the banruptcy of a 5th AC casinos. In an industry which began 2014 with only 12 casinos, that represents nearly half of all the gaming ventures either out-of-business or in trouble.
New Jersey Budget Shortball
Deutsche Bank’s Andrew Zarnett also pointed to the state’s own budget shortfall. Despite that shortfall, the state of New Jersey had to loan Atlantic City $40 million in a short-term loan set to be repaid in August 2015. The loan had to happen, because Atlantic City’s credit rating has been downgraded several times in the past two years and fundraising bonds would not cover costs in that scenario.
New Jersey’s state legislature also has considered restructuring the property tax payments for Atlantic City casinos. The resulting PILOT payment would cap payments and avoid yearly and costly appeals to the court system by the casinos, but it also means the state likely would be paid less in taxes each year.
Jersey’s Support for Cities
Given the many concessions the state has had to make to Atlantic City to keep it afloat, its lawmakers might be fast approaching a stage where they have to look for other solutions. New Jersey has a long tradition of supporting its cities, municipalities, and townships when they have financial trouble. Also, the state has been committed to maintaining the Atlantic City casino monopoly for 40 years–and that model worked for a long time.
Even more, Governor Chris Christie vowed in February 2011 to give the Atlantic City casino industry a 5-year grace period to get its affairs in order. That grace period represents a 5-year moratorium on building new casinos outside Atlantic City. Within the past year, Gov. Christie has vowed to fight (veto) any bill which would approve a casino in North Jersey. Despite all of that, it seems a matter of time before the leaders of New Jersey decide to build a casino outside New Jersey.
Steve Sweeney’s Plan for Rejuvenation
In late-2014, New Jersey Senate President Steve Sweeney signaled his support for a North Jersey casino. He even laid out a plan by which Atlantic City could be bought-off for its compliance with such a gaming venture. In an op-ed piece published in New Jersey and New York newspapers, Sen. Sweeney called for over $1 billion in taxes to be taken from the North Jersey casino and paid to Atlantic City over a 10-year period. This would help Atlantic City transition from a casino gambling economic to a non-gaming tourist economy.
Gaming Companies Interested in Building
If a North Jersey casino were approved, it would attract a great deal of attention from potential investors. Las Vegas Sands chairman Sheldon Adelson spoke about a Meadowlands casino at the Global Gaming Conference last fall and said his company would be interested. MGM Resorts president James Murren recently said in an interview he would be interested in such a proposal.
Caesars Entertainment, which in 2014 applied to have a casino less than 100 miles away in Orange County, New York, has signaled interest. Genting Group, the massive Malaysian conglomerate, also lost out on a similar proposal for the Orange County casino. With a casino already in Queens (Resorts World Queens), it is uncertain whether Genting would be interested. But it was interested in a casino 50 miles away from Queens, and most top gaming companies would be.
Why Have a North Jersey Casino?
The reason a North Jersey casinos makes sense is two-fold. One, a world-class casino in the Meadowlands or Jersey City would become the best, safest choice for gamblers in New York City, as well as the millions of tourists who visit every year. The brawl in Resorts World Queens recently suggests people might prefer to go across the Hudson River to gamble in the Meadowlands.
Two, statistics show that North Jersey residents have been abandoning Atlantic City for closer venues in recent years. Many now go to the casinos in and around the Philadelphia area, such as Sands Bethlehem in Bethlehem, Pennsylvania.
Perhaps Two Casinos in North Jersey
A North Jersey casino (or two) would keep Garden State gamblers at home. That money would stay in the state. One casino in the Meadowlands and one in Jersey City, as one proposal suggested should be the case, would also bring in a lot of money from New York City.
Building in North Jersey makes the most sense for the people of New Jersey, as Duetsche Bank realizes. More and more leaders in New Jersey are starting to recognize that, even though the electorate appears to be changing its mind on the subject. Still, it is only a matter of time before the sentimental and historic connection to Atlantic City–a city of 40,000 people–is overcome by the financial considerations of building a casino 5 miles from New York City–a city of 10 million.
