With so many other Venues to Gamble in Gambling Revenue is down in Atlantic City

Posted by PITHOCRATES - February 3rd, 2013

Week in Review

Once upon a time if you wanted to gamble you had to travel to Las Vegas.  Or break the law.  Now there’s gambling everywhere.  There’s horseracing.  Greyhound racing.  They’re building casinos in cities.  And putting them on riverboats.  Native Americans are opening casinos on their reservations.  And there’s gambling on the Internet.  Even the state has gotten into running numbers.  With their lotteries.  Today you can’t turn around without something to gamble on.  Which is putting a crimp into the old gambling venues (see Christie Failing on Atlantic City Revival: Muni Credit by Terrence Dopp & Michelle Kaske posted 1/30/2013 on Bloomberg).

Atlantic City, the seaside casino resort that Governor Chris Christie says is key to New Jersey’s recovery, is floundering after six straight years of declining gambling revenue…

Two years after Christie created a state-controlled casino district to help revive the city, it’s still losing business to neighbors. Pennsylvania, which expanded gambling, passed New Jersey in 2012 to become the second-largest U.S. betting market after Nevada. Casino-tax revenue is 26 percent below Christie’s budget target midway into the fiscal year, and Hurricane Sandy, which shut the city for five days, is only partly to blame…

Atlantic City’s 12 casinos generated $3.05 billion of revenue last year, down from a 2006 peak of $5.2 billion. The decline will continue, even with the new $2.4 billion Revel casino, unless New Jersey adds a source of gambling income, said state Senator Ray Lesniak. The Democrat is urging Christie to sign a bill to let casinos run online wagering operations…

“This is one of the last chances the governor has to provide a lifeline to Atlantic City casinos,” Farrell said in a Jan. 24 report. “Online gaming sites operated by state casino operators will lead to job creation and drive visitation to Atlantic City…”

The governor, who took office in January 2010, gave Revel Entertainment Group LLC a $261 million tax break to help restart construction of Atlantic City’s first new casino in nine years. Gambling revenue from Revel, which opened last year, has been “well below” expectations, S&P said in a November report…

Casinos comprise more than two-thirds of the tax base in Atlantic City, where more than a quarter of its 40,000 people live in poverty. ..

Christie said Revel would be a catalyst for Atlantic City’s transition from day-trip to luxury resort destination. Some lawmakers are now trying to lure back some of those day-trippers with a measure that would exempt casino-bound tourist buses from paying tolls on state highways.

Cities and states all want to add casino gambling as they see it as a cash cow.  Instead of saving for their retirement or their children’s college education gamblers just give their money to casinos.  Who give a share of it to the cities and states.  It works great.  As long as there isn’t a whole lot of competition.  And people from outside of the city or state travel there to gamble.  Because if it’s only locals gambling that just takes money away from other local businesses.  So if you’re not a resort destination you’re never going to realize big tax revenue from gambling.  Which is the problem Atlantic City is having.

Internet gambling?  Yeah, giving people a way to gamble without going to Atlantic City will bring more people to Atlantic City.  Not.  To be a resort destination they need something more than gambling.  For people can do that in Pennsylvania.  Or on the Internet.  They need something else to make them go to Atlantic City.  Like people go to Las Vegas.  For there are other things to do in Vegas.  Because Vegas is a resort destination.

Tax breaks and toll exemptions?  Yet further proof that we are overtaxed.  For it’s always the go-to idea to improve economic activity.  Lowering the cost of doing things.  By lower taxes.  Or cutting fees like tolls.  For the less you nickel and dime people the more likely they’ll come to spend money in your fair city.  The federal government needs to learn this lesson from our cities and states.  You generate economic activity with lower taxes.  Not higher taxes.

Gambling is big money.  But does it really help a city?  Despite the huge tax revenue they bring into Atlantic City the poverty rate is greater than 25%.  So, no, it doesn’t seem to help.  They would probably be better off lowering taxes and fees and making the city more business friendly.  To create jobs.  And give those people a way out of poverty.

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