As reported several days ago by local news outlets in New Jersey, the Atlantic City Council has called for the local community to gain a bigger percentage of the state’s taxes that its gambling venues pay on generated sports betting revenues. According to a recent report by The Press of Atlantic City news outlet, the City Council of Atlantic City regulatory body of nine members passed a crucial resolution several days ago mainly to support a proposition which was floated by the city’s Mayor Mr. Small Sr.

According to the Mayor’s proposition, it would involve the state of New Jersey’s lawmakers to redirect around 1.25% of generated sports betting revenue taxes directly to the city so that those funds can be redirected towards Atlantic City’s public safety and other programs. The same newspaper also shared that the currently active taxation from 2018 is accessed alongside other taxation laws against gross gaming revenues which are generated by the city’s sportsbooks and by their online partners.

Casino Reinvestment Development Authority

If the City of Council’s and Mayor’s proposition is established, the city’s sportsbooks and their partners will pay bigger taxes while all proceeds will go towards supporting business schemes which are currently managed by the state’s governmental agency Casino Reinvestment Development Authority. This governmental agency was founded back in 1984 and since its inception, it is mainly responsible for navigating the spending of casino-generated reinvestment funds in both private and public projects which should benefit Atlantic City as well as other New Jersey regions.

From its inception until April of 2008, the Casino Reinvestment Development Authority spent around $1.5 billion on various projects in the city as well as around $300 million on projects throughout the state. Reinvestment funds are always received from the state’s gambling facilities which by the current state laws are required to contribute at least 1.25% of their accumulated gross gaming revenues towards private and public projects which benefit the city as approved by the Casino Reinvestment Development Authority.

The Casino Reinvestment Development Authority today consists of seventeen members including six public members who are always appointed by the state’s Governor as well as confirmed by the state’s Senate. Then, there are also two members included who are recommended by the Senate President and once again appointed by the state’s Governor. There are also two members included as recommended by the General Assembly’s Speaker. Then, two members with two-year contracts are appointed by the state’s Governor and one member comes from the state’s Casino Control Commission.

Atlantic City Dissatisfaction

As reported by The Press of Atlantic City newspaper, Atlantic City is very unhappy as it did not receive any proceeds from the city’s sportsbooks and their partners even though the current system gifts massive funds to the communities which host sports betting-friendly Meadowland Racetrack and Monmouth Park Racetrack. The Mayor was the one to warn lawmakers of this big disparity and he even testified before the state’s General Assembly board.

The Mayor told the committee’s state legislators that Atlantic City needs this cash to offset accumulated losses. In one of his official press releases, the Mayor said that they are not asking for something that no one gets. He also added that this is going to be the ultimate fight and he plans on sticking with the taxpayers. The Casino Reinvestment Development Authority has gained around $1.6 million from the currently active 1.25% tax on sports betting revenues since last year while the state’s host municipalities and counties for Monmouth Park Racetrack and Meadowlands Racetrack have netted together around $2 million.

Atlantic City has always been a tourist city known for its gambling venues, stunning beaches, and boardwalk. This New Jersey-located city is also a resort city and one of the visited Atlantic County cities. Back in 2010, Atlantic City had a great population of almost 40,000 residents while today’s number is significantly bigger. Needless to say, Atlantic City is best known for its entertainment and casino industry which spans back to 1976 when the state of New Jersey legalized casino gaming.

The very first Atlantic City-based gambling venue opened its doors in 1978. This move came as the major effort by the state’s officials to revitalize this area. The state’s voters passed a referendum that approved casino gaming in Atlantic City. Once the referendum was passed, the Chalfonte-Haddon Hall Hotel owners jumped on the new opportunity, converted the firm into the Resorts International and opened its casino on the 26^th of May 1978.

A series of other casinos were constructed soon later along the Atlantic City Boardwalk and later in its marina area. However, the introduction of gambling in the area was not enough to eliminate the city’s other issues which made Atlantic City less popular than the gambling’s capital Las Vegas. Back in the 1980s, the city was revitalized thanks boxing matches by Mike Tyson which took place here. Today, Atlantic City is one of the most popular gambling resorts in the United States.

Modern Day Atlantic City

When it comes to Atlantic City today, one of the latest state-powered investigations has shown that the casino market in this area is doubtlessly oversaturated. The same investigation on the city’s nine-casino industry has also shown that several issues are plaguing the city which are hampering local casino operators as they invest in their casino venues.

The investigation was fully commissioned by the city’s Working Group of New Jersey Governor, Mr. Murphy and the main goal was to aid the big debate as to whether the state of New Jersey should institute a certain cap related to the number of casino licenses for the city’s Boardwalk area. Even though generated gross gaming revenues in the city increased by a massive 22.9% to reach around $293 million in October, seven of the city’s nine casinos have enjoyed rather modest rises.

The same investigation has shown that the biggest improvement in generated gross gaming revenues was down to the success at the Hard Rock Hotel and Casino AC and the Ocean Casino Resort. Both of these casino resorts have entered the market in 2018 and it seems that they have been taking customers from their older rivals rather than attracting new gamblers.

Hard Rock Hotel and Casino and Ocean Casino Resort

The investigation conducted by the Working Group of the state’s Governor focuses on these two venues. The investigation’s evaluation reads that the second quarter of the year marked a great year of operation for the new gambling venues. In this time, the city’s gross gaming revenues have reached $280 million which is the average gross gaming revenue of a single casino in the area for the four-quarter period.

However, despite significantly rising numbers related to gross gaming revenues, the study has also suggested that the two new casinos lack a business scheme, hence they are falling when it comes to profitability. This, when combined with oversaturation issues, lead to the operators not being able to invest more in their venues and this way keep their regular customers and bring new visitors. The study also suggests that the situation will get worse following year thanks to the growing competition by the anticipated opening of the currently-constructed Live Hotel and Casino Philadelphia.

August was definitely a great month for nine Atlantic City land-based casinos which saw the fifteenth consecutive month of significantly increased gross gaming revenues. For the month of August, one of the most iconic city’s casinos Boardwalk generated massive gaming revenue of around $352.8 million which is highly more when compared to its generated gaming revenue of $303.9 million for the same period last year.

This is a great 16 percent increase. Commenting on the news, many casino operators active in Atlantic City said that the 2019 summer was one if not the best summer in recent times for the entire city’s gambling industry. According to the press release by the New Jersey Gaming Enforcement Department, DGE, casinos operating here enjoyed a great 6 percent hike which equals to around $286 million for August.

When it comes to the win for online gambling, it equals around $24 million which is actually a massive 65 percent increase when compared to the same period last year. Moreover, the reported gross revenues for wagering on sports were very impressive standing at around $25 million for August which is significantly more than reported gross revenues for the same month last years which were around $9.2 million.

Atlantic City Casinos Enjoying Increased Visitation and Strong Employment

Considering these rising numbers and percentages related to the city’s gambling industry, it is obvious that gambling facilities of Atlantic City saw highly increased visitation and strong employment which naturally resulted in highly increased gross gaming revenues collected not only for August but for the 2019 summer as a whole. When it comes to gross gaming revenues for the city’s industry for this period, they stand at around $2.2 billion through the month of August 2019.

This actually reflects an impressive 22 percent improvement and gain when compared to the previous period in which gross gaming revenues for the industry equaled to around $1.8 billion. Considering the numbers, there is a massive percent swell over the month of August 2018 whose casino win amounted to $1.8 billion. As previously mentioned, the online gaming win for August 2018 saw a stunning 56.6 percent hike to around $297 million when compared to the month of August 2018.

Reported gross gaming revenues for wagering on sports were equally impressive standing at $152 million for August 2019. All in all, the summer of 2019 was one of the best summers in the history of Atlantic City’s gambling industry with reported gross gaming revenues hiked up over 11 percent when compared to the same period including three months last year.

Significantly Increased Interest in the City’s Offering

Commenting on the news, the Casino Control Commission’s Chairman James Plousis told to the Press of Atlantic City that these remarkable results just show that there the city is enjoying a highly increased customer interest in what the city offers in the industry. He also added that this increased customer interest forces leading operators to make strides in other to adjust and stay relevant in the city’s extremely competitive environment.

Commenting on the revenues’ positive showing, the Lloyd D. Levenson Institute’s executive director Rummy Pandit said that gross gaming revenues for August show an extremely very positive trend for the city in general. He also said that the city continues to generate higher gross gaming revenues mainly due to its consistent growth which further strengthens its reputation as one of the premier destinations for all casino enthusiasts.

Atlantic City is a resort city in Atlantic County, New Jersey, popular for its casinos, boardwalk, and fabulous beaches. It’s also known for hosting a Miss America pageant. Casino gambling was legalized in Atlantic City back in 1976, and only two years later, the first casino saw the light of a day. It was followed by opening nine more land-based casinos, two online operators, and offering many other attractive services. They’ve had amazing success and high profits since, but the things haven’t been going well lately, with a number of casinos closing down in the past couple of years. Since the beginning of 2019, their profits have continued to decline.

Huge Losses for AC Casinos

According to the New Jersey Division of Gaming Enforcement, Atlantic City’s casinos generated the income of $704.6 million between the start of January and the end of March 2019, which is a 17.6% improvement in comparison to the same period in 2018. Even though these statistics show a positive trend, things are not that great when it comes to Resorts Casino Hotel.

Resorts Casino Hotel was the only casino, of the seven which operated in Q1 2018, with the same profit year-on-year. The fact is that the income they’ve generated last year was quite low as well. Those other casinos experienced huge declines, especially Harrah’s Resort Atlantic City. Their profits increased by 15.7%. Golden Nugget casino had more luck since their 2.6% tumble was the lowest out of all.

Seems like their problem started when two casinos re-opened this summer. Those casinos were Hard Rock Atlantic City and Ocean Casino Resort, opened in June 2018. They’ve hired thousands of employees and added additional hotel rooms. The key to their success was definitely spreading online gambling and sports betting. Together, these two casinos have made an additional profit worth $135m. Meanwhile, the gross operating revenue of 9 AC’s casinos dropped down for 29.6% to $87m. Bally’s AC experienced an annual fall of 54.4% and Harrah’s was 41.9%.

Reasons behind the Decline

Reasons, why Atlantic City has been experiencing this decline are not simple. It actually happened due to a combination of two circumstances. The first one is the competition in the casino gambling market and the second one is the incensement of sports betting costs.

When it comes to competition, it definitely affected the falling occupancy of Atlantic City’s hotel. It dropped to 72.6% in the first quarter of the year. The situation is much worse than last year, even though some problems with bad weather from last year did not occur this time.

Even though revenue in 2018 rose to $2.9b, operating profits fell significantly, and a 15.4% fall is definitely a reason to get worried. The only casino with year-on-year revenue gain was Borgata, according to Q1 2018 report.

The costs of land-based casino services and sports bookies were high in 2018, and it seems like those costs really contribute to Atlantic City profits decline. Borgata invested $12m in their new land-based sportsbook, which will be opened this summer. It’s called Moneyline Bar & Book and, hopefully, it will increase the overall profit of Atlantic City resort.