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What could happen to Atlantic City if North Jersey casinos open

Friday, June 3, 2016   (0 Comments)
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NJ.com 06/03/16

A Wall Street credit rating agency warned Thursday that as many as half of Atlantic City's remaining casinos could close if casino gambling expands to north Jersey. Fitch Ratings also said the prospect of gaming in the northern part of the state still faces "a long and uncertain future." And even if voters approve them this fall, it could be a few years before the new casinos open.

Currently, Atlantic City is the only place in New Jersey where casinos are legal. But the state's voters will be asked on November's ballot to decide whether to approve two northern gambling halls. Proponents say it will do three things: bring more jobs and revenue to the region, keep the state competitive in the northeastern gaming market, and send tax money to help revitalize Atlantic City. But opponents say it will cause even more pain in Atlantic City, which has seen four of its 12 casinos close in recent years thanks to increasing competition in neighboring states.

Fitch estimates that if north Jersey gaming is enacted, four more casinos could shutter because of the "cannibalization" of visitors who would no longer make the trek to the city. The Trump Taj Mahal, Resorts, and the Golden Nugget would be the most susceptible, and Bally's could also face uncertainty, the agency said. About a 25 percent decline in Atlantic City's gross gaming revenue would wipe out the operating profit of the Golden Nugget, the most profitable of the bunch, Fitch estimated. Drops of 10 and 20 percent would but the Taj and Resorts at risk, respectively, the agency said.

Even if the referendum passes, Fitch said it will be at least four years until a casino could realistically open. The timeline includes a year to pass regulatory legislation, a one-year bidding process, and a two-year construction phase. And the agency noted that the proposal gives Atlantic City casinos an opportunity to apply to own the two gambling halls and that it also give up to $200 million annually in taxes from the new casinos to the city to help offset its losses and reinvent itself as an entertainment destination.



 


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