ATLANTIC CITY — Three years ago, an oversaturated gaming market and increased competition from outside the state forced four casinos in the resort to close, sending the city into a tailspin.
History may be repeating itself in a way, as over the next year, the city and the region’s gaming market are again expected to grow.
While some see it as a sign the resort’s gaming market is turning around, others have said it could lead to another round of closings.
Hard Rock Hotel & Casino Atlantic City is scheduled to open during the summer, and Revel, which could be sold in the coming months, is expected to reopen at some point.
Meanwhile, in October 2018, MGM Springfield in Massachusetts is set to open and provide more out-of-state competition.
“There is a concern with the increased supply that will be created by the opening of the Hard Rock,” said Colin Mansfield, a director at Fitch Ratings and a lead analyst in the gaming, lodging and leisure sector. “The market has shown signs of stabilization after the closures, the remaining operators are seeing increased profits and more supply will take away from the existing properties.”
Standard & Poor’s Global Ratings recently said the ongoing expansion of casino gaming in the region may lead to future casino closings. The group also said the continued expansion of gaming will not have a long-term impact on the city’s credit rating.
“While there could be short-term economic and budgetary gains, they are unlikely to improve state credit quality. With declining tribal gaming revenues in Connecticut and the erosion of the Atlantic City gaming monopoly in New Jersey, long-term risks from commercial casino gaming are an ongoing credit risk,” according to a Standard & Poor’s report. “As states in the region continue their gambling expansion, coupled with the region’s weak demographic trends, the likelihood that these revenues will meaningfully supplement state revenues over the long term diminishes and will have long-term credit implications.”
For the additional properties to be successful, the city needs to do a better job of bringing people in, gaming consultant Robert Ambrose said.
“The market cannot grow by adding just another casino property,” Ambrose said. “The formula for feeding an oversaturated market in part is to expand the amount of guests visiting the city.”
The city has to continue to reinvent itself to attract people who will support the gaming industry, Ambrose said.
“This is no longer just a casino city,” he said.