Competition from start-up gambling establishments in nearby states has devastated the casino industry in New Jersey. The Garden State has seen a 42% decline in gambling revenues since 2006. In January 2014, Caesars Entertainment closed its bankrupt Atlantic City Casino Hotel. Then, in June, the luxury Revel Casino Hotel on the Boardwalk filed bankruptcy for the second time in the two years that it has been opened. Plans are to shutter the facility if a buyer cannot be found soon.
The situation in New Jersey can only deteriorate further as four full-scale casinos get up and running in New York. New Jersey also lost its bid before the U. S. Supreme Court to overturn a ban on sports betting, though legislators and Gov. Chris Christie still plan to launch sports betting in September, according to reports.
The same week that Revel filed for bankruptcy, the Wall Street Journal ran a feature titled “Casino Boom Pinches Northeastern States.” The article said that 26 casinos have opened since 2004 and there are now 24 casinos within 100 miles of Philadelphia. In Delaware, gaming revenues have declined by 29% since 2011 and the casino industry is seeking tax relief.
A study by the University of Nevada, Las Vegas, reported that new casinos have resulted in “a 39% increase in total annual gambling revenue in the mid-Atlantic and New England.” However, market share is being fought for fiercely among more casinos and divvied up. An additional shakeout is a distinct possibility, with closings of underperforming casinos.
Racetracks with casino operations in states like Delaware, Pennsylvania, and West Virginia will continue to see some of their business migrate to states like New York and Ohio, where gambling has recently been expanded. Slots subsidies to purses will come under intense pressure in the states that once had a quasi-monopoly on gambling in their geographic areas.
And racetracks in Kentucky, a non-player in the casino business, are playing the weakest hand of all.
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