New Jersey Lawmakers Call Public Hearing to Discuss North Jersey Casino Proposals

A public hearing has been set for January 7 to hear arguments on behalf of two competing plans for a New Jersey casino expansion outside of Atlantic City. The competing bills are being discussed in the General Assembly and the State Senate, respectively. The main dispute is whether the licensing process should be opened to any gaming developer, or whether it should be restricted to existing AC operators only.

The January 7 public hearing has been called by a General Assembly committee. A similar December 21 public hearing was held in the State Senate. Meanwhile, members of both legislative bodies have been trying to hammer out a deal which makes sense for the people of New Jersey, but also remains sensitive to the needs of Atlantic City.

Assembly Speaker Vincent Prieto says no agreement has been reached by the two sides. Prieto said, “Regrettably, we remain where we were last week.”

Competing Plans in State Politics

In the Senate proposal, New Jersey would issue two licenses for casinos in the North Jersey area. Licensing would be restricted to the casino companies which already have operations in Atlantic City, in hopes new developments would not undermine longtime businesses in the state.

In the General Assembly proposal, New Jersey again would issue two North Jersey licenses. In this case, only one of the two licenses would be earmarked for Atlantic City casino companies. The other would be an at-large license which might go to an AC company, but also would allow bidders from all over the world. Proponents of this plan believe such a contest would assure the best possible casino development in North Jersey — and thus it would best be able to lure gamblers from New York City.

Saving Atlantic City

Both proposals call for tax revenues taken from the North Jersey casinos to be funneled to Atlantic City, which is struggling to pay its bills after the collapse of its casino economy.

Not only does Atlantic City have fewer property tax revenues, due to the reduction of casino operations from 12 to 8 in recent years, but the city also faces a steep decline in jobs. In 2014 alone, Atlantic City lost 9,000 jobs. In a city of only 40,000, that is a catastrophic blow to the jobs market.

Should Casinos Be Built outside New Jersey?

The question of expanding into the North Jersey area is a hot-button issue. Those who want to maintain the Atlantic City monopoly say a North Jersey casino (or two) would deal a death blow to the Boardwalk’s economy. Those in favor of a North Jersey casino plan say Atlantic City is simply too far away from population centers like New York and Philadelphia to have a viable future as a casino-resort destination.

The economic outlook has changed significantly for Atlantic City in the past 25 years. In 1989, New Jersey was one of only two U.S. states with brick-and-mortar casino gambling. Then the Native American tribes won the right to house casinos on their reservations. In 2015, over 40 states have tribal casinos and private casinos. After Native Americans gained the right to open gaming venues, more state leaders began to see gambling as a legit source of revenue, so private casinos were licensed.

How Atlantic City Faltered

On the Eastern Seaboard, market saturation began to eat away at the Atlantic City economy. By the mid-1990s, Foxwoods Casino and Mohegan Sun were built in Connecticut, which began the process of drawing away customers. Then New York and Delaware began adding class II slot machines to their racing facilities. Finally, Pennsylvania legalized both racinos and land-based casinos, such as the Sands Bethlehem outside Philadelphia.

With so many gambling options in nearby states, Atlantic City casinos began to face serious economic issues. From 2006 to 2014, Atlantic City gambling revenues declined from $5.4 billion to $2.4 billion. Casino closings became a commonplace thing.

The Referendum Process

To expand casino gaming beyond Atlantic City, a New Jersey constitutional amendment would be needed. Thus, lawmakers are scrambling to get a referendum on the November 2016 ballot. To do that, State Senators and Assemblymen have to agree upon a plan of action, which is how the current impasse came into being.

Once an agreement has been made, the main concern will be to get enough votes for an amendment. Also, the question of where those casinos might be placed will become a key issue. Lawmakers say they do not want to restrict the placement of casinos. At present, the main options considered are Jersey City and the Meadowlands in East Rutherford.