With Gov. Chris Christie nearing a decision on whether he will sign a bill legalizing Internet gambling, an industry analyst issued a research note Thursday calling the legislation a desperately needed “lifeline” for Atlantic City.
“In our opinion, this is one of the last chances the governor has to provide a lifeline to Atlantic City casinos,” Dennis Farrell Jr., a senior analyst for Wells Fargo, said in the note.
He said he disagrees with opponents of the bill who believe Internet gambling will lead to job losses at brick-and-mortar casinos. “We believe online gaming sites operated by state casino operators will lead to job creation and drive visitation to Atlantic City,” Farrell said.
Christie, who has until Feb. 4 to veto the bill or else it will become law, said during a segment of the “Ask the Governor” NJ101.5 radio show on Tuesday that he continues to have reservations about authorizing Internet gambling in the state. The governor has vetoed similar legislation in the past, citing similar reasons.
“First is I don’t know if it really will help Atlantic City, and I’m concerned that it may help drive traffic away from Atlantic City,” Christie said. “It’s contrary to what we are trying to accomplish there.”
Supporters of the bill argue Internet gambling would help New Jersey compete with other markets, particularly drawing back “convenience gamblers” who don’t want to drive to Atlantic City.
“If all that they are looking for is convenience, then what is more convenient than your iPod,” said Israel Posner, executive director of the Lloyd D. Levenson Institute of Gaming, Hospitality and Tourism at Richard Stockton College.
The database of gamblers who play online but have never visited Atlantic City also can be used to market the resort and turn into a new customer.
“Once you have the convenience gambler in your database, the more profound implication is being able to draw that customer into Atlantic City for other amenities,” Posner said.
Farrell said in his research note that Wells Fargo believes online gambling could grow to $1.5 billion in the next five years, generating up to $150 million in tax revenue annually.
“Companies should be able to cross market their online offerings with their gaming and nongaming amenities, providing a significant advantage over Delaware, Pennsylvania and New York gaming facilities,” Farrell said in the note.
At the same time, researchers have raised the possibility that online gambling might compete with casinos and detract gamblers from leaving their homes. One study conducted in 2011 out of the University of Nevada-Las Vegas estimated that online gambling could cannibalize commercial casino revenue at a rate of 27 to 30 cents on the dollar.
One of the authors, Kahlil Philander, said a subsequent study on the impact of online poker showed that particular game didn’t compete with traditional casinos, but, in fact, complemented them. In other words, playing poker online may encourage gamblers to visit a casino and wager in person.
It’s unclear what the effect would be in New Jersey because the bill allows casinos to offer online any version of a game played in Atlantic City, not just poker.
“The first study that I did was probably the upper limit of any cannibalization,” Philander said.
Internet gambling also raises ethical questions, the governor said on the radio show.
“I’m also really concerned about setting up a whole new generation of addicted gamblers,” Christie said. “If you can sit on the edge of your bed with your laptop and gamble away, you know, the paycheck, that’s a lot different than making the conscious decision of going down to Atlantic City to gamble in a casino.”
Studies have shown that increased access to gambling results in greater incidence of problem gambling, said Donald Weinbaum, executive director of the Council on Compulsive Gambling of New Jersey.
“We do believe that Internet gambling would increase the extent of the problem in New Jersey,” he said. “We’re very concerned about the implication to young people, because generally they are more comfortable with technology.”
Weinbaum also said allowing people to wager at home would lead to greater addiction, because it becomes a more solitary activity.
“It’s easy to get caught up,” he said. “There are definitely risks in moving in this direction.”
Internet gambling advocates have argued that providers will have access to technology that can help identify problem gamblers, particularly if they wager beyond their means.
The bill also requires Internet gambling permit holders to annually pay $150,000, $85,000 of which would go to the compulsive gambling council and the rest to fund treatment programs.
“In some ways, it’s a recognition that people will be affected,” Weinbaum said. “I think it would be great for the state to expand funding for services irrespective of if the Internet gambling goes through,” Weinbaum said.
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