Moody’s Slashes Atlantic City’s Credit Rating
We have noted before that news from Atlantic City tends to typically fall into one of two categories, those being grim and grimmer.
This week the Press of Atlantic City reported on yet another bit of bad news for the long struggling city – a credit downgrade by the ratings firm Moody’s.
Unsteady tax base cited
An eroding tax base is largely to blame for this week’s move by Moody’s, according to the Press of Atlantic City article.
As we reported earlier this month, casino values in the ailing gambling capitol have been dropping in recent years, in part because of a continued lackluster economy, but more so due to revenue loss suffered by Atlantic City in the face of ever-increasing competition from nearby states such as Pennsylvania, Delaware, and others.
While Moody’s has decided to downgrade the debt rating of Atlantic City, it should be noted that competing credit rating firm Standard & Poor’s has not taken the same action, something that Michael Stinson, who serves as the director of revenue and finance for the city, takes as a good sign, though he expressed his dismay at Moody’s Atlantic City demotion.
“Obviously I’m very disappointed with Moody’s decision to downgrade the city. I don’t think they’ve taken everything into consideration. And I believe they should have maintained their rating rather than downgrade,” Stinson was quoted as saying.
“It’s still an investment-grade credit. It carries moderate credit risk. We’re certainly not considering default risk at this www. But the city does have a negative outlook. That means there continues to be downward pressure on its bond rating,” noted David Jacobson, an analyst with Moody’s.
Hopes pinned to nascent iGaming sites
For months, talk of a recovery in Atlantic City has largely centered around the state’s new law to regulate Internet-based wagering. Just last night, real money online gambling web sites launched in New Jersey in a soft launch, or test, mode. The full scale launch is scheduled to take place next Tuesday, November 26, at 9 a.m. local New Jersey time.
Though the regulated market for online betting in the United States remains fairly untested, with games so far available in only three states – Nevada, Delaware, and New Jersey – many analysts predict Internet wagering will be a very big business in New Jersey, by far the largest state, population-wise, to clear the way for residents to access real money gambling sites.
High end estimates have put the annual revenue potential for New Jersey iGaming at $1 billion, money that is desperately needed in Atlantic City, where revenue has declined every year for six years running and land-based casinos are struggling to hold onto jobs.
New Jersey positioning itself to be online gambling industry leader
New Jersey is hoping not only to entice new gamblers with online casino games and online poker; it is hoping to establish itself as the center of the burgeoning U.S. online gambling market.
To that end, New Jersey State Senator Raymond D. Lesniak said this week that he plans to introduce a bill that will allow for international gambling companies to come to New Jersey.
Lesniak believes that the regulated market in the United States will continue to grow in both volume and respectability as the industry gets established, and also establishes a track record for tight regulation and safe transactions, meaning that New Jersey could become an attractive home base for such companies.
“I didn’t come up with this proposal. Some of the gaming companies did because they want to come here,” remarked Senator Lesniak, a major supporter of the bill that regulated online gambling in the Garden State, which was signed into law by New Jersey’s Republican Governor Chris Christie in February of this year.
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