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Pennsylvania Casinos Winning Atlantic City Customers

The year 2005 was an incredibly very good year for this casino resort town.

That year was the high-water mark for casino gambling in New Jersey, with greater than $5.9 billion in gaming revenue.

The eight years because? Awful.

The newest figures show gaming revenue has plunged 44%, to around $3 billion, in line with Joe Weinert, senior vice president of Spectrum Gaming Group.

The final time Atlantic City brought in much less than $3 billion was 1991.

The totally free fall continues with many consequences:

• More than 10,000 jobs lost.

• Numerous casinos on shaky monetary footing.

• Revel, touted as the city’s savior, rapidly went bust and currently is wanting to rebrand itself following bankruptcy.

Investment dollars have flowed elsewhere. Just two major developments are on the city’s horizon. A single is often a conference center at Harrah’s, underwritten in aspect by state assistance and tax credits. The other is a Bass Pro Shop.

Gaming tax income to the state has been slashed in half, curtailing help for seniors and contracting assistance for financial development.

“There is a bottom, but we don’t know what that is definitely,” Weinert mentioned. “This can be a longer loss than anyone anticipated.”

Price of convenience

Comfort gambling and regional competitors are driving the decline.

Casinos with fewer amenities – dismissed recently by a Tropicana casino executive Tony Rodio as “Walmarts with slot machines as well as a bar in addition to a restaurant” – have opened in or near key population centers.

That is a far unique business model from New Jersey’s dozen full-service casinos clustered in an oceanside resort with intractable urban issues, even in a city of about 40,000 men and women.

Regional competitors “will continue to develop for the next handful of years. The expansion is more rapidly and broader than anticipated,” stated Weinert, who points to continuing expansion plans in nearby states as well as the likelihood of a second casino coming to the heart of Philadelphia.

In 2012, Pennsylvania surpassed New Jersey to grow to be No. two behind Nevada in money spent on gambling, in line with the American Gaming Association’s 2013 State from the States report. Gamblers spent $3.two billion in Pennsylvania casinos vs. New Jersey’s $3.1 billion. That meant $1.5 billion for Pennsylvania coffers last year vs. $254.eight million in New Jersey due to differing tax prices.

New Jersey’s tax income declined eight.2%; Pennsylvania’s was up 2.1% from 2011.

In 2005, gambling brought in $490.two million in taxes for New Jersey. Pennsylvania did not have any casinos.

Precisely exactly where did all of New Jersey’s revenue go?

Brian Tyrrell, the vice president from the New Jersey Travel Sector Association, smiles and shakes his head. He takes out a pen to answer the query.

A professor of tourism at Richard Stockton College, Tyrrell draws a map from the Northeast and Mid-Atlantic states as he discusses the proliferation of casinos in what after was an East Coast marketplace monopolized by Atlantic City.

Connecticut, Delaware, Maryland, New York and Pennsylvania, – as soon as prime feeders for Atlantic City’s drive-in casino industry – each and every have a number of casinos now.

Tyrrell puts a major X over Connecticut and the rest of New England. Too far.

He says to not pay a lot interest to competitors in western New York state and western Pennsylvania. Also as well far. And under no circumstances thoughts West Virginia – way as well far.

He draws an oval stretching from the western finish of Extended Island to Delaware and suburban Washington. That may be the three-hour or much less drive-in market place for Atlantic City.

Then he writes, 2005 – $5.9 billion.

Next he writes: 2012 – NY, PA, MD, DE, NJ – $8.9 billion.

Take away New Jersey’s $3 billion in revenue, and that leaves $5.9 billion.

“That’s the core market,” he says, tapping the pen around the oval to emphasize that the amounts are the identical. “That’s where New Jersey’s casino revenue went.”

Skimming off the top

Want to see how nearby states ate Atlantic City’s lunch? Go to Parx Casino in Bensalem, Pa., a suburb north of Philadelphia.

At midday midweek, the parking lot is jammed. The license plates show where Parx’s market place: mainly Pennsylvania, then New Jersey, followed by New York. A smattering of cars come from other states.

A man dressed within a T-shirt bearing the name in the nearby sheet metal business he owns – and has ducked out of for any few hours of gambling – shakes his head in the crowded lot.

“It’s astounding how crowded it truly is at this hour. PA is skimming New Jersey. Lots of people would rather drive here, drive to get a handful of minutes, in lieu of drive greater than an hour to Atlantic City. I ought to know; I was among them,” he said as he produced his way in to the casino.

As opposed to Atlantic City, parking at Parx is no cost.

Unlike Atlantic City, Parx has no bus programs bringing in gamblers – patrons come by vehicle, on their own schedule.

As opposed to Atlantic City, meals possibilities are restricted. The high-end food outlet through the day is Chickie’s and Pete’s, a sports bar.

As opposed to Atlantic City, the casino has no headline entertainers.

And in contrast to Atlantic City, the casino is filled with gamblers at midday midweek.

At Parx, 80% in the casino’s business enterprise comes from inside 20 miles.

Maureen Andrews, 75, of Croyden, Pa., was going to with close friends from grammar school: “Atlantic City is better with amenities. And they’ve a lot more to perform around the boardwalk. But that is neighborhood.”

In addition to Parx, Pennsylvania has 11 other casinos – six not far from New Jersey, specially Harrah’s in Chester, just over the river from New Jersey, and Sugar Property in Philadelphia.

Some, for example Sands Bethlehem, have amenities – big-name chefs, comedy shows and headline entertainment – along the lines of Atlantic City.

But most are stripped down, nicely appointed warehouses with slot machines.

Welcome to convenience gambling.

That is the thing the Atlantic City casino executive missed when he derided his competitors in Pennsylvania: Walmart with slot machines performs.

“There’s a location for Bloomingdale’s and a place for Walmart,” stated Doug Harbach, a spokesman for the Pennsylvania Gaming Handle Board. “Pennsylvania can be a industry of convenience. Casinos here are undertaking what they have to do to be effective companies.”

By this summer time, Pennsylvania may have 12 casinos – precisely the same number Atlantic City has – but Pennsylvania currently would be the bigger marketplace with regards to gaming income.

“Many states are now replicating what we’ve carried out. The concept is usually to quit the loss of gaming revenue to other states,” Harbach mentioned.

Missed wake-up get in touch with

Even though the sustained decline of Atlantic City’s fortunes is reasonably recent, New Jersey, which has had casinos for 35 years, had loads of time and fair warning about competition.

The state and also the gaming companies just ignored it.

The warning shot came in 1992, the year Foxwoods Resort Casino opened in southeast Connecticut. That year slot development slowed for the first time in New Jersey.

But when all round casino income did not drop, Atlantic City just kept undertaking precisely as it had accomplished ahead of.

“That really should have already been a wake-up call. They should really have protected their interest,” said Tyrrell, the tourism professor.

“Atlantic City was a location city with an ocean. That is hard to duplicate,” stated Tyrrell, who added that the state and the city failed to reinvest in a meaningful way that protected the resort’s interests. “They treated Atlantic City like a cash cow.”

He particularly faulted the state on several critical issues, like not expanding service to Atlantic City International Airport, which has been under state control due to the fact 1992 (just 1% of gamblers arrive by air), failing to create timely expansion improvements to state roadways (projects on the Garden State Parkway and Atlantic City Expressway are ongoing) and adding state-imposed $3 parking costs at casinos.

A recent Stockton College study identified that every single type of travel to Atlantic City was down in 2012, overall by 4.3%.

“Distance is nowhere as close to as critical as travel time and convenience,” Tyrrell mentioned from the impediments to travel the state has been slow to address.

That said, he is unimpressed by the lack of amenities in some of New Jersey’s nearest competition. “Blech!” he says of Harrah’s in Chester, Pa.

Veteran journalist George Anastasia, who began covering Atlantic City within the late 1970s as a reporter for The Philadelphia Inquirer, is even harsher in his assessment of the failures to create Atlantic City a much more resilient and full location to compete with “the arcades with slot machines” that he says several Pennsylvania casinos resemble.

“Atlantic City ought to have gotten beyond becoming a quick-hit check out. It ought to have already been a Vegas experience, where you go there and remain there,” said Anastasia, who retired in the Inquirer lately but continues to create as a freelance journalist.

“With the casinos, there was many rivalry, loads of competitors for the gambler. Nobody had vision. They sold it to the voters as a tool of urban redevelopment, but that was a hustle, a massive hustle,” Anastasia said. “This was an opportunity for people with vision. Now it’s a second-rate casino city. A bunch of casinos within a honky-tonk place.”

However, Nevada turned the corner in 2011, posting a 1.5% boost in gaming revenue following many years of contractions.

Diverse amenities

John Palmieri plus the state Casino Reinvestment Improvement Authority he leads had been charged by Gov. Chris Christie with turning around the city’s fortunes by diversifying its amenities to broaden the resort’s appeal beyond gambling day-trippers.

Eighteen months into Palmieri’s tenure, Frank Fahrenkopf, the president in the American Gaming Association, stated he is not confident these initiatives have but had any true effect around the city’s fortunes.

Palmieri, who will not gamble and never has set foot inside a Pennsylvania casino, believes the state’s initiatives at some point will work though he does not reduce the challenges.

“Time is on the essence,” he mentioned, and added that “aggressive correcting” nevertheless must take place in Atlantic City, for the reason that “the economy seriously declined along with the competition is massive.”

Following the governor’s creation of a tourism district inside the city, which Christie repeatedly has said must be clean and protected, the development authority is adding lights, knocking down blighted buildings, paying to repave streets, looking to tempt new vendors, adding roving goodwill ambassadors for the boardwalk and underwriting the spend of 39 additional law enforcement officers.

The Atlantic City Alliance is spending $20 million a year to industry the city and redirect emphasis away from gambling and toward added amenities and overnight stays.

This seems to possess had some success.

Overnight stays have improved together with noncasino sources of income, cushioning the ongoing loss of gaming income, mentioned Jeff Gauracino, a spokesman for the alliance.

Harrah’s, a prosperous casino house in Atlantic City, derives 25% of its income from noncasino spending; its sister property in Las Vegas earns 55% of its revenue from noncasino income, mentioned Tyrrell, the tourism professor.

One particular lingering issue that dogs the city would be the “unresolved tensions” that stay among the city’s mayor, Lorenzo Langford, and Christie, mentioned Palmieri, who reports to the governor.

“Atlantic City is uniquely positioned to be OK extended term. Its greatest resource is definitely the beach plus the boardwalk,” the mayor mentioned. “I consider there is certainly a bottom for us, but I’m not a prognosticator.”

 
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