It’s not much compared to the real thing but virtual gaming stands to generate $250 million to $500 million in gambling revenues in New Jersey in its first year, which is good news for the state’s credit standing, according to Moody’s, the ratings firm.
Live gambling in Atlantic City generates about $2.8 billion annually, but New Jersey’s decision to become the third state to legalize virtual gambling “provides a much-needed boost for a market that has suffered protracted declines,” Moody’s analysts said in a report. Fitch, another ratings agency, also predicted $200 million to $300 million in revenues in the first year, an estimate well below the $1.2 billion Gov. Chris Christie (R) predicted. Smaller revenues mean a smaller tax haul.
Both ratings agencies describe it as positive news, but say the impact will likely be small.
“Given the limited profit potential for any individual operator, Internet gaming is unlikely to materially improve credit quality enough to affect ratings for the foreseeable future,” Moody’s found. Fitch put it more bluntly: “online gambling is not going to be the savior of the [Atlantic City] casino market.”
Thirteen gambling Web sites run by six casinos were allowed to go live last Tuesday under a bill signed into law in February. And while it is generally good news for the state’s credit standing, the newly available online gaming is unlikely to have a big impact.
Gambling on the Internet is legal in only two other states, according to the bipartisan National Conference on State Legislatures: Delaware and Nevada, which both also passed their laws recently. But they may not be alone for long. Eight states — California, Hawaii, Illinois, Iowa, Massachusetts, Mississippi, Pennsylvania and Texas — are pursuing similar laws, and federal legalization was also introduced this year by New York Republican Rep. Peter King.
But that doesn’t mean there aren’t detractors. Billionaire casino magnate and conservative super donor Sheldon Adelson plans to launch a campaign against legalized online gambling in January targeting women, African Americans and Hispanics, who Adelson’s forthcoming coalition hopes will be sympathetic to the cause.
Another New Jersey battle over allowing sports gambling has been tied up in the courts, with Christie vowing to take the fight to the U.S. Supreme Court.
CORRECTION: An earlier version of this post misstated when Delaware legalized gambling. It was last year.