Pro-New Jersey Casino Expansion Ad Highlights “Financial Cost” of Referendum Vote
Posted on: September 14, 2016, 02:00h.
Last updated on: September 14, 2016, 12:06h.
Supporters of New Jersey’s northern casino expansion proposal have launched a new TV ad campaign emphasizing the billions of dollars in potential revenue lost to the casino expansion of neighboring states.
It highlights the resulting loss of funding for programs aimed at helping?senior citizens and the disabled.
OUR Turn NJ, the public issue advocacy group behind the campaign, puts a figure of $15 billion on the loss to New Jersey from casino expansion in neighboring states.
This is money that would otherwise be spent on vital social programs, funding that?instead comes out of the taxpayer’s pocket. New Jersey taxpayers have paid $1.8 billion to support such programs, claims the ad.? ?
Pros and Cons
New Jersey citizens will vote on November 8th, whether to break Atlantic City’s longstanding monopoly on casinos and sanction two licenses in the north, close to the border with New York. It’s hoped that the move will attract droves of casino-goers from the New York metropolitan area, bolstering the Atlantic City’s struggling casino sector.
But some believe northern expansion could be a?nail in the coffin for?the sector, which has only recently shown signs of stability?following the closure of a quarter of its casino properties in the past three years.
The new casinos would cannibalize Atlantic City’s market share, which is the right-size currently, according to opponents of northern expansion.
Blame the Politicians
The new pro-expansion publicity campaign follows recently launched ads by the movement against North Jersey Casinos, which have highlighted public mistrust of politicians in Trenton. A recent TV spot created by the group “Trenton’s Bad Bet” emphasizes the state government’s problems administering pensions for law enforcement, barely mentioning casinos at all.
Trenton’s Bad Beat is bankrolled by Malaysian Casino giant Genting, which owns a slots parlor in Queens.
“Instead of funding our pensions, they gave big contracts to Wall Street.?The North Jersey casinos would be no different,” asserts the ad. “Politicians would break promises, special interests would get rich and, when the casinos fail, we would pay the price.”
A poll survey published in July suggested that the expansion push has an uphill battle. Fifty-seven percent of New Jersey voters questioned said they were against the proposed constitutional amendment that would permit the new casinos, while 35 percent were in favor.
Should the movement prevail, however, Hard Rock International is interested in building a casino in partnership with the Meadowlands Racetrack in East Rutherford, home to the New York Giants and New York Jets. There has also been a proposal from Paul Fireman for a project on the waterfront in Jersey City, directly across from Lower Manhattan.
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Paul Fireman has proposed a stupendous resort project, that includes a casino. And Assemblyman Ralph Caputo has proposed new Legislation that could clear the air on how much of the new tax revenue would go to Atlantic City, Seniors, the disabled and to the NJ Horse Industry. This is great news for North Jersey gaming, but even with new Legislation, if it isn't specific enough; the referendum will fail. Assemblyman Caputo is on point, that Atlantic City, Seniors and the disabled, need to know what they can reasonably expect, from North Jersey gaming. Why not establish the Pennsylvania tax rates for developers; as this would level the playing field with North Jersey's principal competition; while producing probably in excess of $400 million annually in new taxes. Then determine what percent is going to Seniors and the disabled (that have lost $1.8 billion,since PA approved slots in greater Philadelphia). And tell Atlantic City what their share is going to be for giving up a monopoly; that was effectively lost in 2006. And the PA tax (55% on slot and 16% on table win), could apply to the more expensive Jersey City casino, by giving development credits; against the win tax; for amounts spent above the $1 billion minimum investment in the referendum. The other critical component for a successful referendum, is to severely limit the possible locations; preferably just the two that have developed plans, the Meadowlands and Jersey City. This would prevent NIMBY (Not In My Back Yard) from prompting a no vote from residents in communities, that would still be in play. That was the primary reason the referendum failed in 1974 (60% to 40%); where every county could have a casino. The beauty of this plan, is the Meadowlands could be operational, within a year; probably 4 to 5 years before NY could act in Manhattan. And paying substantial taxes as early as 2017. I recently prepared a study of county populations in Eastern PA, New Jersey, NY City and the NY Counties of Orange, Westchester, Nassau and Suffolk. The Meadowlands has over 6 million persons, that are closer to the Track, than and other gaming establishment. That is the same sized convenience market, that permits Aqueduct to win $800 million at a race track with only slot machines. But with table games, a large showroom, multiple restaurants and lounges, and better access to Manhattan (by car,bus,limo and rail); a Meadowlands casino could easily surpass the Aqueduct revenues and possibly surpass the $1 billion mark. And being only 15 minutes from Manhattan, the North Jersey casinos would benefit from the visitors, staying at Manhattan's 98,726 hotel rooms. Both the Meadowlands and Liberty Rising would benefit enormously on slower mid-week nights, with probably 5% to 10% of the estimated 20 million annual business men,and convention/trade show attendees; looking for something different to do during the evening hours. And if you add in the weekend tourist, the total Manhattan Hotel visitor numbers come closer to 35 million annually. (Using 80% Occupancy at 1.2 guests per room mid-week; and 60% week end occupancy at 1.9 guests per room). Those concerned citizens of South Jersey, have to realize that the Atlantic City's business model has to move toward that of the Strip in Las Vegas; where casino revenue is less than 35% of total revenue, while AC's is still 70%. The big difference is the larger Strip resorts are making 73% of their operating earnings from the once forgotten departments; rooms, food, beverage, convention, entertainment an retail. The Strip learned about the value of the convention/trade show business; that fills rooms mid-week. All you have to do is look at booking web site, and compare the Saturday night room rate for AC casinos, with that of Tuesday night. Frequently, in the Fall, Winter and Spring; the mid-week room is 80% to 90% cheaper. Add to that, that AC casino resorts comp. more than 50% of their room, food and beverage revenues; plus give away $ millions in free play, and you see a business plan that needs redirection.