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Casino Frenzy Hits the Northeast

Posted on August 10th, 2010

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States in shaky fiscal conditions, especially in terms of liquidity may have to resort to building casinos and the easy revenue that comes with them. taxpayers may have to bear some burden with this trend in case demand for slot machines, poker tables and racetracks does not match the supply. Northeast states have been enticed with the promise of easy money in casino gaming. At least 20 casinos are in the planning stage in these states that currently have 41 casinos in operation already.

Competition from neighboring casinos has already affected New Jersey’s Atlantic City, which has claimed the reputation of being the East Coast’s Las Vegas, and up until recently, has had a monopoly of sorts with the industry in the area. A number of strong competitions include New York State tribal casinos, which have just approved the addition of slot machines for its Aqueduct racetrack. Another state giving Atlantic City a considerably hard time is Pennsylvania which has only recently launched new attractions like table games to its nine casinos. In this state alone, five new casinos are being planned.

The state of Massachusetts has also joined the cashing in on the gaming trend as lawmakers in July 31 approved plans to build gaming halls in the state but was put on hold due to some issues with the Governor. This in turn would offer stiff competition to two casinos in Connecticut which are operated by tribes, Delaware’s racetrack casinos totaling to three which have recently started operating table games and Rhode Island’s two racetrack casinos. The states of Maryland, Ohio and Maine look poised to follow their neighbors’ leads. The citizens of Maine will be deciding if they would join the casino-building frenzy come November. Ohio has already inched closer by approving casinos, while Maryland has jumped the gun by opening a casino in the Interstate 95 corridor.

With casinos mushrooming in the same area, a direct result of this is market saturation, which in turn could have, at worst, devastating effects. The gaming pie is sliced thinner now with more and more stakeholders wanting a slice. Meanwhile, government is also relying on revenue from tax to be generated by the new casinos and winnings of gamers, which would help them fill their depleting coffers and avoid tax hikes. States in completion are now taking on predatory attitudes, with proposals to poach gamblers from neighboring states and devising plans to keep the money of gamers playing in their casinos within their borders in tow. The executive director of New Jersey’s Casino Reinvestment Development Authority Tom Carver pointed out that virtually free money has been provided by the casino industry for decades.

States now want to keep the money that gamers spend within the state without the latter having to go elsewhere, thus states building their own casinos. However, Carver states that the danger is looming as gamers have lost a substantial part of their disposable income. Gaming industry executives express a more positive outlook that it shares with some industry analysts. They claim that there is little chance of saturation in the Northeast because of the area’s dense population. Looking into the current picture shows that a gamer spends $108 on an average casino visit, which, according to a survey by the American Gaming association, has remained more or less unchanged for 30 years. States get a slice of that through tax revenue, which range from as low as 6.75 percent in Nevada to as high as 55 percent in Pennsylvania.

Thus, the picture in each state varies. The state’s tax revenues in New Jersey have fallen from $500 million in 2006 to $312 million in 2009, and a further drop to $275 in 2010 with the same 11 casinos. The picture in Pennsylvania is rosier though as casinos in the state posted its best-ever earnings last month, amounting to $211.1 million. With this, New Jersey Gov. Chris Christie proposed for the state to takeover casino operations in Atlantic City to ease the drop of revenue and the plight of 9,000 casino workers who have lost employment.