New Jersey still ranks among national leaders in terms of casino gaming’s economic impact, but other states, including nearby competitors, are gaining ground, according to a recent report.
Casino gaming in the Garden State supported 39,000 jobs, created $1.2 billion in taxes and accounted for a $6.5 billion in total economic impact last year, based on data collected by the American Gaming Association.
New Jersey ranked sixth, 10th and tied for fifth, respectively in those categories, compared to 42 other states with commercial or tribal gaming.
Kevin Ortzman, president of the Casino Association of New Jersey, said the Atlantic City casino industry “serves as a powerful economic engine for the state” in terms of job creation, taxes and fees. Ortzman added that revenue taxes “provide vital services for New Jersey’s seniors and the disabled, and is essential to our public education system.”
“Further, the industry’s significant capital investments and purchases of goods and services from vendors throughout the state creates a ripple effect across the economy,” said Ortzman. “The casinos support independent vendors across a substantial variety of industries — from food purveyors, bakeries and beverage distributors to transportation companies, radio stations, professional consultants and construction contractors — creating jobs with these vendors and fueling the state’s economy. The casino industry will continue to invest in redevelopment projects and nongaming services to attract visitors to our great city.”
Atlantic City still the No. 2 market
Atlantic City is still the country’s second-largest commercial casino market, but four of the next eight largest markets — Baltimore/Washington, D.C., New York City, Philadelphia and the Poconos in Pennsylvania — are all areas the resort used to draw gamblers from.
“With the shrinkage of its (casino gaming) market now more than a decade in the past, New Jersey isn’t going to resume its place near the top of that list in the foreseeable future,” said David G. Schwartz, associate vice provost at the University of Nevada-Las Vegas and former director of the school’s Center for Gaming Research.
Between 1987 and 2006, Atlantic City had 12 casino properties and reported $5.1 billion in total gaming revenue before the Sands Casino Hotel closed. By 2014, gaming revenue had been cut in half and four properties had closed their doors. Two years later, a fifth casino shut down, bringing the total number of gaming parlors in the resort to seven.
In June 2018, Atlantic City gained two casinos with the openings of Hard Rock Hotel & Casino Atlantic City and Ocean Casino Resort.
New Jersey is the only state that restricts commercial casino gaming to a single geographic location, but Schwartz said he expects other states to “level off soon” since their expansion options are becoming limited.
Schwartz said New Jersey should not be concerned with what other states are doing and, instead, find “what works best for New Jersey in the long term.”
New Jersey and New York both generated the same amount of total economic impact from casino gaming, while Pennsylvania reported $6.3 billion.
Rummy Pandit, executive director of the Lloyd D. Levenson Institute for Gaming, Hospitality & Tourism at Stockton University, said the expansion of gaming into neighboring states has created “market limitations on the size and therefore the relative economic impact of the casino industry in New Jersey.”
Pandit noted the number of jobs supported by gaming in New Jersey compares favorably to New York (25,784) and Pennsylvania (33,171), particularly given that Atlantic City has just nine casinos and a smaller population.
“Employment, a major component of economic impact, is in turn limited by the number of casino establishments,” he said.
Gaming’s impact predicted to fall
Schwartz said he expects gaming’s employment impact to fall nationwide. He pointed to recent cost-saving measures by MGM Resorts International where 264 jobs were eliminated and another 1,000 are expected to be cut. MGM operates Atlantic City’s largest casino employer and highest-revenue generating property, Borgata Hotel Casino & Spa.
New Jersey has one of the United States’ most competitive tax rates on casino gaming revenue. The state taxes gross gaming revenue generated from an Atlantic City casino at 8% and online gaming at 15%. Sports betting, which was introduced legally in New Jersey in 2018, is taxed at 8.5% inside casinos and 13% from online wagers.
New York, which collected $2 billion in taxes and tribal revenue shares, puts a 65% tax on revenue from racinos and up to a 45% tax from gaming machines at casinos, while taxing table games at 10%. Pennsylvania taxes table games at 16%, electronic table games at 35% and gaming machines at 54%, which generated $2.5 billion last year.
Both Pandit and Schwartz said that for New Jersey to remain competitive, diversification was critical.
“To compete with casino markets in the scale of Nevada, California, Oklahoma and Florida, New Jersey will need to continue focusing on increasing its prominence and draw as a resort destination, while developing its national and international appeal,” said Pandit.
Nevada ranked No. 1 in all three categories studied by the AGA, providing jobs for more than 410,000 people, generating $8.3 billion in taxes and creating nearly $56 billion in total economic impact. California, where only tribal casinos are permitted, secured the second ranking in each category.
Nationwide, casino gaming supported 1.8 million jobs and added $41 billion into government coffers last year. Casino gaming’s total economic impact in 2018 was $261.4 billion, according to the AGA.