Atlantic City to Add Smaller Casinos?

As business in Atlantic City’s casinos is down, some lawmakers want to add more casinos to the mix in what would be the biggest gambling expansion in the city since gambling was legalized 32 years ago. On Monday, a state law allowing the expansion could hit the floor. It is already facing stiff opposition, though.

Proponents of expansion say that adding more casinos to the market would increase demand and give people who haven’t been to Atlantic City, New Jersey, in a while a new reason to visit. Opponents say that adding more casinos would dilute the market and take business away from the established casinos in the city. On that note, the main opponents of this bill are the current casinos and their unions.

There is also another variable to consider: casino size. Currently, state law requires that casinos have a minimum of 500 rooms, with many having well over 1,000. The result is that all of the casinos are large, fancy establishments that you would expect from fine Atlantic City resorts. Under the proposed bill, the room minimum would be dropped to 200.

Proponents of the bill say that allowing smaller casinos will bring more variety to Atlantic City, which would help them compete with the smaller casinos in Delaware and Pennsylvania. The current casinos, however, disagree and say that it will do two things: 1) take business away from the existing casinos, and 2) lower the standard of the casinos in the city. They equate it to having a bad neighbor moving a trailer into their high-class luxury community. Adding smaller, cheaper casinos to the mix would change the image of Atlantic City from being one of only first-class establishments.

Bob McDevitt, president of one of those unions (Unite-HERE), says that if the bill is passed they would be “cheapening the billions and billions of dollars already invested in Atlantic City, and changing the definition of what gaming in New Jersey is.” He also said that anyone who wants to enter the nation’s second-largest gambling market (to Las Vegas), “better be able to pony up the money to do a first-class facility. Otherwise, you have no business being here.”

Proponents of gambling expansion say that adding smaller casinos will bring more people to the city, which will help all businesses, even those not related to gambling. Adding new attractions to an area is a proven way to make money, but the question about lowering the standards is a valid one. A reason given for lowering the size standards is an attempt to match the standards in competing areas in Philadelphia and Delaware, where new casinos can be added for considerably cheaper.

There’s also a question of how much money business owners are willing to pay out in advance. State Senator James Whelan, a former mayor of Atlantic City who will introduce the legislation, says that times have changed and in order to compete they need to allow smaller casinos. He says that in Philadelphia and Delaware “you can get in for tens of millions of dollars. In Atlantic City, 500 rooms costs you $800 million, minimum, and nobody’s writing checks for $800 million or $1 billion nowadays.”

Therein lies the main debate at issue. In the middle of a recession where the Atlantic City casino industry is hurting, would it be good or bad for the economy to add new, smaller casinos? Would the added variety bring new people to the area or would it make current Atlantic City customers think that their scene is no longer better than the competition? If Whelan is right, the legislation could revive a struggling economy. If he’s wrong, however, he could further hinder an economy that is already in had shape.

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