Which is why I felt a little old the other day reading that three Atlantic City-based operators—Revel, Showboat and Trump Plaza—were about to cease operations, and are most likely closed as you are reading this. All told, four Atlantic City properties have been forced to the wayside this year, and no one is jumping in to buy or reopen them. Indeed, some gaming analysts hint that even more closings may be on the way.
The reasons for Atlantic City difficulties are no secret—a slow-to-recover economy combined with cross-border gaming competition from Pennsylvania and New York has led to a drastic reduction in New Jersey casino visitation. This, in turn, has dramatically impacted Atlantic City casino revenues, to the tune of a 45 percent decline over the past seven years. The sad truth is what was once a $5.21 billion regional gaming market is now a $2.86 billion (and perhaps less) market, incapable of supporting such a large concentration of casino properties. Operators hanging on for a recovery could no longer afford to do so, and acted appropriately.
And Atlantic City is not the only regional gaming market to undergo such a correction of late. The Tunica, Miss., market lost a casino earlier this year when Harrah’s Tunica closed in May, just the latest in a series of Mississippi River gaming properties to close. Further south, the Gulf Coast region lost Margaritaville Casino & Restaurant Biloxi, although other casinos are under development there that could take its place.
Any business closing is usually a sad affair, but in the instance of casino closings in Mississippi and Atlantic City, is it necessarily a bad thing? From a macroeconomic point of view, it probably is not. Gaming is still strong throughout the east, just spread out into more markets than before….allowing states like Pennsylvania to enjoy some of the spoils, even if at New Jersey’s expense From a free enterprise/supply and demand point of view, the closing of casinos in what have become oversaturated markets can only benefit the gaming properties with enough backing or customer support to stay open. Indeed, the Atlantic City gaming market will eventually shakeout, with surviving properties all the stronger and the city’s economic base less casino-centric and more diverse, a process that is already taking place.
Still, economic theory is a cold replacement for lost jobs or a declining tax base. That is why it should come as little surprise that officials in New Jersey are contemplating casino expansion into the northern communities of the state, with the Meadowlands often mentioned as a potential new casino hub. On paper, this makes sense in the short- to medium-term; these northern properties should siphon New York and New Jersey gamblers currently trekking to Pennsylvania casinos.
But is moving the state’s casino heft further north a wise long-term strategy, or is New Jersey just setting itself up for more economic heartache if and when New York City mandates more casino development within its borders? If that does come to pass, will the Meadowlands just become another Atlantic City? As Yoga Berra once famously said, “It’s déjà vu all over again.”