One rarely sees a state legislative initiative as misguided as the proposed state constitutional amendment currently before the Legislature to expand casino gambling to three North Jersey locations.
It is beyond any doubt that a North Jersey casino will have an extremely detrimental impact on Atlantic County, where our economy is hugely dependent on gaming and tourism. Unlike North Jersey, we do not have the insurance, banking and pharmaceutical industries to sustain us.
Just one new casino in the Meadowlands would result in a 45 percent decline in revenues for Atlantic City, according to a study by the Casino Association of New Jersey, and would lead to more foreclosures and even greater unemployment in the region.
Philadelphia, a city of 1.5 million year-round residents, is facing a similar situation with the addition of a second casino within its city limits and the fifth casino in Southeastern Pennsylvania.
SugarHouse Casino argued that Philadelphia could not sustain a second casino without potentially devastating effects on the other state casino licensees as well as the community. "The economic indicators are irrefutable," stated Wendy Hamilton, SugarHouse general manager.
"This Town Ain't Big Enough for the Five of Us," a report issued by Deutsche Bank analyst Andrew Zarnett, noted that "the addition of another casino in the greater Philadelphia market will be a significant negative for the current operators in the market."
The proponents of North Jersey casinos say they will mitigate any adverse impact on Atlantic City by sending the city a portion of the tax revenues generated - tax revenues they claim could be as high as $200 million annually. I don't believe this for a second; nor should you.
As gaming industry analysts have noted, the casino market in the Northeast is highly saturated. How likely is it that North Jersey casinos will generate anything near the revenues promised? Whatever amount of funding Atlantic City would receive would be determined by a legislative process. And according to state Sen. Jeff Van Drew, the state is notorious for not honoring its funding commitments.
New Jersey needs a reality check. The landscape is ripe with examples of casinos that have opened with disappointing results.
When Harrah's opened New Orleans' first casino, revenues were 60 percent below projections and the project went bankrupt. The Ohio Casino Control Commission estimated Cleveland's first casino in 2012 would bring in revenues of well over $1 billion. After two years, Ohio's gambling revenues were a dismal 25 percent of the state's projection.
I could cite more examples, but the point is clear: No revenue guarantees are certain.
Our region already has 60 casinos and that number is expected to increase. Nationwide the number of casinos is approaching 1,000. Moody's Investors Service revised its outlook on the U.S. gaming industry from stable to negative, a reflection of recent declines in monthly gaming revenue for most jurisdictions.
For the Legislature to proceed with this resolution that is not based on any comprehensive economic strategy is irresponsible and a disservice to the citizens throughout the state.
Only in New Jersey can the solution to "too many casinos" be "more casinos."