All posts by Adam Berger

Future of North Jersey Casinos Now In Voters’ Hands

On Monday, three-fifths of each house of the New Jersey legislature passed resolutions that will put a question on the ballot in November asking voters if they want to expand casino gaming outside of Atlantic City.  As we previously posted here and here, the North Jersey casino proposal will allow for two casinos to be located at least 72 miles from Atlantic City, in separate counties.  The minimum investment required for a North Jersey casino will be $1 billion.  Current Atlantic City casino owners will be given an exclusive period of 60 days to submit bids for the two North Jersey casino licenses before bidding is opened up broadly.  Current owners of Atlantic City casinos may partner with other investors/developers to submit a bid for a North Jersey casino license.

If New Jersey voters pass the referendum in November, the legislature will then need to adopt enabling legislation.  This legislation will provide the details for the bidding process and the tax rate for North Jersey casinos.  Atlantic City casinos currently pay an effective tax rate of 9.25% on gross gaming revenue.  North Jersey casinos likely will be required to pay a significantly higher rate, perhaps in excess of 50%.

We will provide updates as developments occur.

Duane Morris Attorney Adam Berger Writes About the P.A. Gaming Industry

Associate Adam Berger in the Cherry Hill office wrote an article for the Philadelphia Business Journal titled “P.A. Gaming Industry at a Crossroads: Lessons from Atlantic City.”

As the song goes, Atlantic City didn’t know what it had until it was gone. In 2006, the city’s casinos brought in more than $5.2 billion in gaming revenue. In 2014, that number was down almost 50 percent, to $2.7 billion, and expected to fall even further in 2015, the first full year of operations following the closures of four casinos – Atlantic Club, Revel, Showboat and Trump Plaza.

Pennsylvania casinos, on the other hand, experienced their highest total gaming revenue of $3.15 billion in 2012. Gaming revenues declined slightly in the Keystone State during each of the next two years, down to just over $3 billion in 2014, but despite the recent declines, Pennsylvania remains the second largest gaming market in the nation, next to Nevada. It is from this point of strength that Pennsylvania needs to recognize what it’s got and not repeat the mistakes of its neighbor to the east.

So how did New Jersey allow its casino market to fall so far? Clearly the loss of New Jersey’s East Coast monopoly on gaming — as a result of the advent of casino gaming in Connecticut, Delaware, Maryland, New York and Pennsylvania — did not help. But this increased competition did not seal Atlantic City’s fate; rather, its fate was sealed during the preceding decades when Atlantic City casino operators failed to improve their properties and make Atlantic City a true and viable destination. Instead of making necessary capital expenditures and adding resort amenities, casino owners upstreamed profits while their properties slowly became outdated. The result was a city full of mostly unexciting casinos that offered little more than the slots-in-box style options found in neighboring states.

To read the full article, please visit the Philadelphia Business Journal website.

Bill Restricting Casino Gaming Operations in Pennsylvania Goes to Committee

Last week, a Pennsylvania bill, which would restrict the hours of operation of Pennsylvania casinos, was referred to the House Committee on Gaming Oversight. Specifically, House Bill Number 165 would require casinos in the Commonwealth to close between the hours of 2 a.m. and 6 a.m. In a memorandum accompanying the legislation, State Representative Will Tallman, a co-sponsor of the bill, suggested that closing the casinos for a couple hours each day would reduce the prevalence of problem gambling.

If this legislation were to pass, Pennsylvania would be an outlier in the region as casinos in neighboring states – including New Jersey, Delaware, Ohio and Maryland – maintain 24 hour gaming operations. Additionally, New York recently selected three upstate applicants to develop full-scale resort casino facilities, which are expected to open in the next couple years. Once open, each of these facilities will offer 24-hour gaming to patrons.

It will be interesting to see if the Pennsylvania House committee charged with overseeing the Commonwealth’s gaming industry will support this legislation – and add another hurdle to a casino industry that is already struggling to keep gaming dollars away from rival gaming markets – or if the committee will determine that the existing regulatory safeguards to prevent problem gambling are sufficient. Stay tuned for updates on this and other legislation affecting the Pennsylvania gaming industry.

What’s Next For Pennsylvania’s Gaming Industry?

Although by all accounts Pennsylvania’s gaming industry has a been a great success since the first casino opened in the Commonwealth in 2006, the industry now faces stiffer competition than ever for gaming dollars in the region. From 2006 to 2012, gaming revenues grew each year on a year-over-year basis, but declined slightly from 2012 to 2013. Within the next few years, several new casinos will open along the east coast in New York, Massachusetts and Maryland. Additionally, New Jersey and Delaware each recently launched Internet gaming in their states and Delaware has entered into a compact with Nevada to attract more Internet gaming revenue. The stakes are high for Pennsylvania’s gaming industry to remain competitive and to not lose gaming dollars to neighboring states.

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Massachusetts To Hold Internet Gaming Forum

On the heels of its decision to award the sole slots parlor license to Penn National Gaming, the Massachusetts Gaming Commission is prepared to make headlines again. This time for its scheduled educational forum on Internet gaming. Specifically, on March 11, 2014, the Massachusetts Gaming Commission will hold an all-day forum where industry experts and members of the Massachusetts legislature will present on a wide array of Internet gaming topics.

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