Gaming legislation addressing conflicts in-state, out-of-state

TRENTON – Whether it was trying to find innovative ways to gamble, changing the state’s horse racing industry, or sprucing up a hard-hit resort town, gaming made up a big part of the last legislative year.

One of the Christie administration’s biggest gaming goals this past session was to make Atlantic City more of a destination, a place where people would want to stay overnight instead of just hitting the slots during the day and returning to the comfort of their homes at night.

 To achieve that goal, the state helped foot money to open the state-of-the-art Revel casino and resort, which is serving as one of the first tests of what’s basically a new business model for casinos here.

Meanwhile, some lawmakers are convinced that parts of the state outside of Atlantic City should provide more casino gaming opportunities. Northern New Jersey lawmakers pushed hard for that in the last session, and are likely to continue that quest.

Having gaming terminals set up at bars, they say, would provide residents closer opportunities for gaming, rather than having to make the long trek down to Atlantic City, or to gambling halls in Pennsylvania, Connecticut or New York.

In addition to providing more places for casino games, the Legislature passed a bill, A2575, which provides gamblers with another option:  mobile gaming devices. That way, gamblers could play and post bets without having to be in the same room by using portable machines. Gov. Chris Christie signed the law this past summer. 

Assemblyman John Burzichelli, (D-3), of Paulsboro, described the mobile gaming devices as “a smart 21st century adaptation on the part of the casinos.”

On top of new locales and more methods, the state looked to expand the variety of games, primarily through sports betting.

Last November, voters passed by a 2-1 margin a ballot referendum that amended the state Constitution to allow the state to pass laws to legalize sports betting at casinos and at horse racetracks throughout the state. Only four states currently allow legalized sports gambling – Nevada, Delaware, Oregon and Montana.

Experts said the focus on improving gaming – and its potential to produce more revenues – is welcome. But whether it will be enough, nobody is certain. Gaming makes up a crucial part of the state’s tourism industry, which last year generated $38 billion from visitors. 

When it comes to ginning up interest in Revel, the result thus far has not been good. Data from the state Division of Gaming Enforcement shows the Revel casino – in terms of game winnings – finishing near the bottom of the pack. The Borgata, another upscale Atlantic City casino that may well have inspired Revel’s creation, has been consistently on top in that category. Revel’s woes already have some pessimists issuing storm warnings.

But one analyst, Israel Posner, executive director of the Lloyd Levenson Institute of Gaming, Hospitality and Tourism at  Richard Stockton College, said Revel should not be written off this early in the game.

The casinos in Atlantic City, especially the newer ones, need to become magnets for regional tourism, where people come for two to three days and businesses and corporations can hold conferences. And that takes time.

“It’s undergoing the growing pains of an industry that’s going through a transition,” Posner said, describing Revel as one of the major vehicles in that transition. 

“It is a major, bold step forward, toward entertainment resort destinations,” Posner said. “I don’t think the lenders were looking for return (on investment) in year one.”

Christie said in a recent press conference more time is needed to accurately gauge Revel’s successes, saying three months (the amount of time it has been opened) is insufficient. He added that Revel is “attempting to change the paradigm” in Atlantic City, moving from a “casino-centric model” to “a resort-centric model.”

Christie added that the nature of gaming is changing, given the options available in other states, and the reality is that Atlantic City no longer has a monopoly on what industry experts call commuter gamblers.

“We are not going to get the volume of day-trippers we used to,” Christie said.

But some lawmakers, such as Assemblyman Ralph Caputo, (D-28), Belleville, said more options for casino gaming are needed statewide outside Atlantic City. Caputo has specifically called for allowing casino gaming in the Meadowlands, which is 130 miles away from Atlantic City.

He believes that by having more options available, residents in the state’s northern section would be less likely to travel out of state for their gaming, and the Garden State, he said, would be less likely to become “a gambling afterthought.”

“The reality is that Atlantic City is losing many of its North Jersey customers to newly opened casinos in Pennsylvania and New York,” Caputo said in a statement. “We can continue to ignore that fact at our own peril, or we can move forward with a sensible statewide gaming plan that creates jobs and economic development.”
But Posner disagrees, saying the state can’t afford to see its main resort city face more competition, especially within the state. He said it’s already trying to stay relevant with increasing options outside of the state.

“It’s not something you want to undermine with micro-casinos,” Posner said about Atlantic City’s revitalization. “You have a full-scale destination.”

Another group, the Sierra Club, which has frequently sided with Democrats on numerous environmental issues, said opening the Meadowlands to casino gaming would undoubtedly cause more development.

“The wetlands in the Meadowlands are already being paved over for an unnecessary megamall and now could potentially become a new gambling oasis,” said N.J. Sierra Club Executive Director Jeff Tittel. “Allowing gambling and casinos in the Meadowlands in addition to the American Dream entertainment complex will add more unnecessary development, pollution and congestion in an already environmentally sensitive and heavily trafficked area.”

 “We need to make sure that the Meadowlands gets protected and what development does occur enhances the Meadowlands, not overdevelops it,” Tittel added. “We are concerned that by bringing in casino gambling it will put development pressures on the region that will lead to more flooding, more traffic, and more water pollution.”

Sports Betting

 

The state is also seeking to get into sports wagering. After voters expressed their support for the idea last November, Sens. Ray Lesniak, (D-20), Elizabeth, and Jeff Van Drew, (D-1), of Dennis, sponsored a bill, S3113, calling for legalized sports betting.

Christie described sports betting as “another way to continue to boost our casino and horse racing industries and encourage tourists to come to Atlantic City.”

When a group of professional and college sports organizations filed suit in federal court earlier this year to overturn the state’s sports betting law, Lesniak welcomed the challenge.

“By moving forward with a law to legalize sports wagering in New Jersey – a law that was approved overwhelmingly by the voting public of New Jersey – we drew a line in the sand and dared the sports organizations to cross it.” Lesniak said. “Now we can once and for all put to rest the question of New Jersey’s ability to determine for itself the appropriateness of sports wagering.”

Christie signed Lesniak and Van Drew’s bill.

Club CalNeva, a Las Vegas-based company which operates over 30 sports books and handles billions of dollars in bets, estimates that sports betting will bring in, annually, $1.3 billion in sports wagering gross revenues and $120 million in tax revenues for New Jersey.  It is also estimated that sports wagering could create thousands of new jobs for New Jersey residents.

But Posner said sports betting in Nevada makes up only about 2 percent of its overall revenues, and the only big money makers tend to be college basketball’s March Madness and the National Football League’s Super Bowl. Still, it’s another option for gaming enthusiasts, so it’s hard to be against the idea, he said.

Battling out-of-state interests

The horse racing industry continued to struggle. But despite its woes, Christie wanted the state to get out of the business of subsidizing it. He entered into an agreement to let a real estate developer, Jeffrey Gural, who has made campaign contributions to both political parties, take over one of the tracks.

Another agreement would enable the state to no longer have to subsidize purses.

Christie signed a bipartisan bill, S2078, sponsored by Sen. Jennifer Beck, (R-12), Red Bank, and Senate President Steve Sweeney, (D-3), West Deptford, that provides tax incentives to contractors who build off-track wagering facilities.

Lesniak referred to an Econsult analysis that said online gaming could produce between $210 million and $250 million in gross profit for casinos each year, resulting in $47 million to $55 million in state tax revenue. That same report also estimated that online gaming could create between 1,500 and 1,900 jobs.

“We have to start fighting for jobs and revenues here in New Jersey, and tell out-of-state gaming interests to pound salt,” Lesniak said.  “We cannot kowtow to out-of-state special interests at every turn when New Jersey’s own economic well-being is at stake.  Governor Christie raised some concern with the original online gaming legislation, and I’m willing to work through those concerns, but it’s time to quit giving out-of-state gaming conglomerates with a vested interest in the status quo the ability to dictate policy in the Garden State.”

While there have been developments within the industry, some aspects of it remain unaddressed. Lesniak has called for legalizing online gambling in New Jersey.

By allowing Internet gambling, Lesniak said that New Jersey will be ahead of the curve, adding that it’s only a matter of time before other states look into it.

“We have to give this industry the tools and support to be relevant in the 21st century, and by authorizing intrastate online betting, we can provide access to a gaming product which other states have yet to capitalize on.  We need to act now, before more of our state’s horse farms or casinos close their doors forever.”

“Online gaming will be a huge boost for the casino industry,” said Lesniak.  “It can also be a temporary savior for our horse racing industry until we get sports betting at our casinos and racetracks.”

Thus far, there’s no indication the administration would sign such a bill.

Gaming legislation addressing conflicts in-state, out-of-state