The proposed establishment of casinos in New York City presents a potential challenge to Atlantic City, a traditional hub of gambling. Atlantic City has long depended on patrons from the New York metro area as a primary source of revenue for its physical casinos. The emergence of casinos in New York could redirect a large portion of this clientele, affecting Atlantic City’s economic health.
Around 20% to 30% of Atlantic City’s gaming revenue historically comes from visitors from the New York metro area. This reliance highlights the possible impact that new casinos in New York may have on Atlantic City’s economy. Industry experts anticipate a decline in Atlantic City’s in-person gambling revenues. Jim Allen from Hard Rock International predicts this could be as much as a 30% reduction, given the presence of new casinos in the New York City area.
Legislation in New York underscores this pressing issue. A bill is under review by Governor Kathy Hochul to expedite the licensing process for new casino sites. If approved, it could bring in up to $2 billion each year and create up to 60,000 jobs, indicating the appeal of the New York market.
The Current Market Landscape
Despite these challenges, Atlantic City has shown some resilience, reporting small increases in net revenue in recent years, though there was a drop in gross operating profit during the same time. Hard Rock Atlantic City notably expanded its market share and gross gaming revenue, indicating a strong local market position.
Online casinos present another competitive front. Although not yet operational in New York, there’s movement toward legalizing online gambling. The reintroduction of a bill for legalizing online slots and table games shows this trend, which could further draw consumers away from Atlantic City’s traditional casinos due to the convenience of online platforms.
To counter these potential losses, Atlantic City needs strategic initiatives to boost its attractiveness, including infrastructure improvements and enhanced public safety. Moreover, leveraging New Jersey’s thriving online gambling sector could help counterbalance potential setbacks. New Jersey’s online sector has been very successful, regularly setting new benchmarks for online casino revenue. Atlantic City might benefit from this success by integrating online platforms with land-based establishments.
Regional Online Casinos: A Growing Competitive Force
Online gambling has become an essential part of the casino industry, with New Jersey leading in building a successful virtual market. Online casinos in New Jersey have often outperformed traditional ones in revenue, reflecting consumer preference for gaming. This presents additional challenges for Atlantic City’s physical casinos.
With neighboring states like New York moving toward online casino legalization, competition intensifies. The possible arrival of online platforms in New York would increase pressure on Atlantic City’s market. The convenience of online casinos, like those in New Jersey, might draw customers away from traditional venues. Atlantic City’s strategy in responding to this expansion is important for its market position in the northeastern U.S.
Additionally, the economic implications are that if online gambling becomes legal in New York, tax revenue could increase due to a proposed 30.5% tax rate. This possibility heightens the need for Atlantic City to innovate and expand beyond typical gambling offerings.
Companies with major operations in Atlantic City, such as Hard Rock and Caesars Entertainment, are considering licenses for New York City operations. This move acknowledges the growing landscape that may favor new entrants. Furthermore, concerns over New Jersey’s Meadowlands project underscore potential challenges to Atlantic City’s market share.
While Atlantic City faces competitive pressures from New York, online gaming could offset some adverse effects on traditional casinos. A study by Eilers & Krejcik Gaming suggests online gaming can enhance land-based casino revenue by an average of 2.44% quarterly. Hence, New Jersey’s robust online market may help counterbalance challenges from regional competitors.
The Bottom Line
In conclusion, Atlantic City must stay alert and adaptable, employing strategic changes and the latest in online gaming technology to maintain its status in the northeastern market amidst new opportunities and hurdles.
