New Jersey suffered the brunt of the force of Hurricane Sandy in 2012, but Atlantic City had been in decline for decades previous to the storm. The latest attempt to revive the fortunes of the seaside resort is the legalization of Internet gambling. While there is little doubt that the measure will bring in money for New Jersey’s state coffers, it is debatable whether Atlantic City and its casinos will benefit from Internet gaming.
Here She Is
Along with Las Vegas, Atlantic City was one of two original gambling destinations in the United States. Where Las Vegas lured tourists with showgirls and flashing lights, Atlantic City has always been more of an all-ages attraction.
The Boardwalk and the iconic Miss America pageant defined Atlantic City almost as much as its reputation as a gambling outpost. However, in recent years, legalized gambling has spread to many states across the country. Other gambling meccas such as Tunica, Mississippi have siphoned off some of the tourist trade from Atlantic City. Of course, the hurricane had a major impact, wiping out whole sections of the New Jersey shoreline.
In 2006, Congress banned the use of credit cards to pay for illegal Internet gambling operations, many of which operated offshore to avoid taxation and other regulations. However, in 2011, the Justice Department ruled that the Congressional ban only applied to sports betting. The ruling opened the door to Internet gambling by operations located inside the United States – a potentially rich source of revenue for cash-strapped states. So far New Jersey, Delaware, Nevada and Louisiana have instituted measures legalizing Internet gambling for state residents.
Governor Chris Christie signed a law in February 2013 that allowed Internet gambling for residents over age twenty-one. Residents would have to physically visit and register with a casino before they would be able to gamble online. Only casinos located within the state would be able to open their virtual doors to gambling. Internet gambling would be taxed at a hefty fifteen percent, versus eight percent taxation on brick-and-mortar establishments. Christie estimated that legalized Internet gambling would bring more than $435 million in revenues to the state in 2013. By contrast, onsite gambling yielded approximately $239 million in revenues.
Gambling in Your PJs
Skeptics express fears that Internet gambling will cannibalize earnings from onsite gambling rather than supplement it. The skeptics explain that people will consider the choice between making the long drive to Atlantic City, perhaps paying for accommodations, not to mention food and parking, and decide that gambling on their living room couches while wearing their pajamas is a more appealing prospect. Gamblers who are inspired to do their gaming in person may opt for locations in neighboring states that may actually be closer to their homes than the casinos in Atlantic City.
Supporters of the idea argue that Internet gambling is inevitable, and that Atlantic City may as well attempt to reap at least some of the economic benefits. The challenge will be to develop sufficient incentives to entice people to leave their homes and come out to the casinos. The movie industry has faced a similar challenge, responding in many cases by offering an enhanced experience with comfortable chairs and full service menus, offering the movie experience as an entertainment experience. Atlantic City’s casinos may do well to adopt a similar mindset.