2006-present: Will New Jersey’s Gambling Industry Keep Growing?

What happened in 2006?

In 2006 the casinos in Atlantic City fell silent. No cards were dealt, and no roulette wheels spun. The poker chips were piled high, untouched, and no one was pumping money into the slot machines.

This was the first time the gambling industry had reached a standstill since it was legalized via a referendum in 1976.

The first casino to open its legal doors in 1978 was Resorts Atlantic City; however, it was forced to close temporarily during the state shutdown.

Unfortunately, nowhere was immune from the closures. And it wasn’t just casinos that were affected; the Government shutdown meant courts and parks were off-limits as well.

A stand-off between the state’s governor, Jon Corzine, and the legislature brought New Jersey to a standstill. At the time, Atlantic City’s casinos generated $1.3 million in state taxes daily.

However, with their doors closed, they were bringing in no revenue, and fifty-thousand employees found themselves unemployed.

As a result, tourists were reported as saying that they would make alternative plans and headed for West Virginia and Connecticut.

Dispute

The dispute between the politicians was over a proposed rise in sales tax. You might wonder what casinos and racetracks have to do with the state government when they are privately owned commercial enterprises.

It is because the state’s laws say that gambling establishments must be overseen by the New Jersey Casino Control Commission to operate legally.

Without that department working, the casinos and racetracks had no choice but to close. They remained closed for eight days until the impasse was resolved.

New markets opened

While that does not sound like a long time, it was peak tourist season. Many tourists who had never considered going anywhere but Atlantic City were now awakened to alternative destinations.

Pennsylvania opened its market around this time, and before long, New Jersey’s gambling industry was in a downward spiral.

Gambling in the state never fully recovered

It has been reported that as recently as 2021, the gambling industry in the state has never recovered to its pre-2006 peaks.

However, the rise in online casinos, which now account for a large proportion of the gambling purse, has helped to turn things around.

The pandemic effect

There can be no denying that another factor affecting the profitability of land-based casinos in recent years was Covid-19.

The pandemic and ensuing lockdowns meant many establishments had to close their doors for extended periods. As a result, many people stuck in their homes tried online gambling for the first time.

Bouncing back

However, things have finally bounced back. The New Jersey Division of Gaming Enforcement announced a total gaming revenue of $470.6 million for August 2022. This is a combined figure for casinos, racetracks, and their partners.

The figure was a 10.1% increase on August 2021. In-person casino gambling grew 4.4% year-on-year, but the land-based sector has still not recovered to pre-pandemic levels.

On the other hand, online gambling in the state’s casinos increased by 16.1% on the previous year, and sports betting grew by 25.5% compared to 2021.

However, iGaming and sports betting are not straightforward financial models like the bricks-and-mortar casinos. As you can see from a list of operators on Time2play‘s website, there are many interested parties.

The casinos do not get to keep all the money. It has to be shared with third-party operators, including tech platforms, software developers, and sports books.

A blend of in-person and online

The Lloyd Levenson Institute at Stockton University studies the Atlantic City casino industry. They acknowledged that in-person casino winnings were trailing pre-pandemic levels but noted that they were up on every other August since 2015.

They also stated that bricks-and-mortar gaming revenues are slow compared to internet gaming revenues.

Jane Bokunewicz, a director at the university, said the figures “could potentially suggest a change in consumer behavior that doesn’t cannibalize in-person gaming but includes significant internet gaming activity.”

The suggestion is that the casino industry can remain competitive if New Jersey becomes less reliant on in-person gaming activity. With changing attitudes towards gambling across the US, there will undoubtedly be fierce competition in the market.

Building in resilience

By having a wide selection of gambling options, New Jersey can be more resilient in the future.

While many states are changing their gambling laws, New Jersey has the advantage of being among the earliest to allow online casino gambling.

While much of the focus is on the legalization of sports betting across the USA, there are still only a handful of states that allow incredibly popular online casino platforms to operate.

Back to 2006 figures at last

In August 2022, internet casino games brought in $131.4 million. The figure for September was up again, and most of the growth was driven by online slots.

By the end of 2022, gambling revenue in New Jersey matched it’s all-time high at $5.2 billion. That high was recorded in 2006. However, in 2022, only half of it came from in-person gambling.

A future blend

The future for New Jersey’s gambling industry seems to be a blend of in-person and online casinos and sports books. There is no reason to believe that the recent recovery will not mean continued growth beyond the current figures.

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