James Murren, the CEO of MGM Resorts International, recently told a group of reporters at the American Gaming Association offices that a casino in North Jersey makes sense for the state. Mr. Murren also suggested that a Meadowlands casino could help the struggling Atlantic City, presumably if Steve Sweeney's AC tax plan were adopted for such a gaming establishment.
MGM Resorts Would Be Interested
The MGM Resorts executive said his company would get involving in the licensing process if New Jersey's leaders approved a North Jersey casino. Murren told the assembled journalists, who had assembled at the AGA for a Wednesday press conference, "The market opportunity up north is vast. If that were to pass, MGM would be interested in pursuing it."
Murren's opinion could be important, because it is a considered opinion and the Las Vegas gaming executive has a big stake in the Atlantic City economy. In September 2014, after 5 years in exile from the Boardwalk, MGM Resorts had restored its 50% stake in the Borgata Casino, the most lucrative of all Atlantic City casinos these days. Since a North Jersey casino could hurt business prospects for all the gaming operations in Atlantic City, having a local gaming exec call for a North Jersey casino is important.
Atlantic City Monopoly
Placing a new casino in the North Jersey area is a controversial topic in the state. For several decades, the political leaders of New Jersey have maintained an Atlantic City monopoly. The Boardwalk has been the state's casino gaming industry since 1976. Most legislative efforts on the state level have resolved to protect the destination resort city from rivals inside and outside the state. That decision worked fine until 2004 and later, when other nearby states began to build their own casinos.
Pennsylvania was the most important factor. For decades, many Pennsylvanians flocked to Atlantic City to gamble. After the state started building casinos and authorizing slot machines in racetracks, most of those people stayed home. Now, Pennsylvania collects the second-most revenue of any US state--second only to Nevada. Gaming revenues fell in Atlantic City from $5.4 billion in 2006 to $2.4 billion 2014.
AC Never Prepared Itself
Mr. Murren says Atlantic City never prepared for the contingency of other states building gaming venues. Instead of building non-gaming attractions the way the Las Vegas Strip did, Atlantic City simply relied on the 20th century model of a lone casino. Now, Atlantic City is paying the price for its lack of vision. In 2014, 4 of the city's 12 casinos closed. Only a last-minute influx of cash from Carl Icahn saved a fifth casino, the Trump Taj Mahal, from closing.
James Murren sees room for optimism, but he also believes New Jersey's leaders need to be proactive. He said, "The worst, I think, is behind Atlantic City."
Part of the problem from 2008 onward was the Global Recession. Hurricane Sandy further damaged the local economy at a time the state was beginning its slow recovery from the recession. Now, the market is saturated and states like New York and Pennsylvania are planning more casinos on the borders of New Jersey.
New Jersey Must be Proactive
To get out ahead of the competition, New Jersey must build a first-class casino in the Meadowlands, says Murren. Not only would such a casino keep North Jersey residents from gambling in the Philadelphia and Upstate New York areas, but it likely would draw most of the New York City gamblers to it, due to proximity. The Meadowlands would be a few miles from Manhattan, while the Upstate New York casinos would be 100 miles away or more.
Under those circumstances, a North Jersey casino should be lucrative. Not only would it draw in New Yorkers, but it should collect a fair amount of the international gamblers who visit New York City as tourists, business people, or convention attendees.
Various Meadowlands Casino Plans
Sheldon Adelson, Chairman of the Las Vegas Sands Corporation, said in the past he would be interested in developing a North Jersey casino himself. Caesars Entertainment and Genting Limited, two other major casino companies, lost out in the New York State licensing process, after both put in bids for an Orange County casino. Those companies also would likely want to bid on a casino, too.
Steve Sweeney, President of the New Jersey State Senate, has proposed a plan to build a North Jersey casino that would help fund Atlantic City's transition to a non-gaming tourist economy. Under Sweeney's plan, over $1 billion in taxes collected from the Meadowlands gaming facility would be directed to Atlantic City over a 10-year period. This money could be used to build new infrastructure and facilities to lure tourists to the oceanside resort city.
Federal Emergency Relief Agency Funds
In the short term, Some good news happened in Atlantic City recently. The Federal Emergency Relief Agency announced it was releasing $8.8 million in relief funds to help rebuild the damage caused by Hurricane Sandy on the Boardwalk. With a city which borrowed $40 million from the state and which is facing a $100 million budget shortfall in 2015, any such funds are a boon.
Sen. Robert Menendez said about the relief funds, "While there is still much work to be done, this federal funding is an important investment in Atlantic City, helping to rebuild its iconic boardwalk stronger and more resilient to handle future storms, while maintaining an attraction that continues to draw crowds of visitors and fuel the local economy."
