Credit Agencies: iGaming in New Jersey Will Help – Somewhat
Just a couple of weeks ago, the credit rating agency Moody’s was slashing the credit rating of Atlantic City.
Fast forward to this week, and the same company, Moody’s, is saying that the recently-launched real money online gambling industry in New Jersey will help the credit rating of the entire state, even if revenue gains fall short of the $1 billion in annual earnings some have estimated on the high end.
As for that estimate, both Moody’s and another rating firm, Fitch Ratings, anticipate that the take from the state’s online betting business will indeed come in at only a fraction of that one billion dollar figure.
Windfall may be more of a breeze-fall
A story on the Washington Post’s blog earlier this week notes that while the added revenue that legalized Internet betting will bring to the Garden State will help the overall bottom line there, analysts aren’t predicting quite the windfall that New Jersey Governor Chris Christie and others have forecast.
So, while the cash that New Jersey generates from virtual wagers will provide a boost, it will be a rather small one.
“Given the limited profit potential for any individual operator, Internet gaming is unlikely to materially improve credit quality enough to affect ratings for the foreseeable future,” the Post quoted from a Moody’s report.
Of the twelve land-based casinos in Atlantic City – to which all Internet betting operations are legally tied – six had real money gambling sites up and running on the inaugural day of the industry, November 26. Games were launched in a soft-play mode five days prior, on November 21, at which time New Jersey officially became the third state in the nation to offer some variety of online betting, behind Nevada and Delaware.
Analysts seem to agree on lower figure
Though Governor Christie, who just won re-election in November and is often cited as a frontrunner for the GOP presidential nod in 2016, has said that the New Jersey real money online betting market could generate more than $1 billion per year, Moody’s put the total at a more modest $250 million to $500 million, according to the Press of Atlantic City.
The Press reported that Fitch Ratings saw the income generated in New Jersey being lower still, at between $200 million and $300 million annually.
“Although some market participants will benefit, New Jersey online gambling is not going to be the savior of the (Atlantic City) casino market. In some ways, it will be detrimental because it has kept brick-and-mortar supply in the market when the level of demand dictates that some supply should be removed,” Fitch said in a report.
Calling online betting a savior for the city is not much of an understatement – all year the arrival of the games has been trumpeted by local and national media as Atlantic City’s twelve casinos continue to report revenue decline in the face of increased competition from nearby states, Pennsylvania in particular.
And while November was a historic month for New Jersey with the start of regulated online wagering, last month also saw the passage of a constitutional amendment in the state of New York that cleared the way for the eventual construction of seven new land-based casinos there, which, when built, should serve to further depress the Atlantic City casino market.
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