Online Gambling Will be Boon to Atlantic City, According to Wall Street Analysts
It is no secret that Atlantic City is not exactly booming. For six consecutive years, revenue there has been on a steady decline. Its newest casino, the $2.4 billion Revel, just exited from Chapter 11 bankruptcy. And to top it all off, last fall the city, along with the rest of the New Jersey coastline, was slammed by Hurricane Sandy, from which the region is still trying to recover.
Prognosis for AC is good, according to Wall Street analysts
Last week the East Coast Gaming Congress was held, and it was there that a panel comprised of a group of Wall Street analysts agreed that Internet gaming will be a positive force for the embattled city, and should go a long way in attracting a new, younger and more tech-savvy gambler.
Under the terms of New Jersey’s Internet gambling law, which was signed by first-term Republican Governor Chris Christie at the end of February, the new industry will be centered in Atlantic City.
Some analysts predict that the online gambling industry could grow to become a $500 million to $600 million business in the Garden State.
“The pie can end up in some relatively thin pieces, but this is a significant opportunity for casino operators in New Jersey,” said David Berman, who serves as senior managing director for Macquarie Capital. “The most exciting thing I see is the prospect of Internet gambling and sports betting that will create a new distribution channel.”
Some customers may ditch land-based casinos when sites go live
While the prediction in New Jersey, as well as in the other two states where online wagering legislation has been passed – Nevada and Delaware – has largely been that online gambling shouldn’t encroach on visits to brick and mortar casinos, the reality is that the online gambling market in the United States is largely untested and therefore the behavior of online gamblers can not yet be predicted. Whether those players will also choose to visit the existing land-based casinos in Atlantic City and elsewhere is as yet unknown.
At this week’s conference, some of the analysts present said that some “cannibalization” of the market was inevitable, meaning that it is likely that the ease and availability of online gambling is likely to keep some customers from traveling to the land-based casinos. Just how many gamblers will abandon brick and mortar properties in favor of their electronic counterpart remains to be seen.
The president of Boyd Gaming, half owner of Atlantic City’s Borgata Casino, Kevin Smith, countered that fear and said that he is convinced that the introduction of online gambling will only be of benefit to the land-based Borgata, saying, “I am confident it will stimulate growth and visitation for our casino itself.”
“It is a way to bring a new customer here — a customer who has not made Atlantic City their destination of choice for entertainment,” Smith went on to add.
While an exact date when New Jersey residents might expect to log onto the real-money gambling sites has not yet been made public, it is expected that the first will launch sometime later this fall.