As Tina Griego reports, beginning in the late 1970s, Atlantic City had a broad monopoly on gambling in the Northeast.
The East Coast gambling landscape, however, now looks like this:
It’s no surprise, then, that analysts have been mixed on the prospect of more casinos appearing in the Northeast — and that the word “boom” has been thrown around. Since 2001, nine more states have opened casinos, according to the Center for Gaming Research at the University of Nevada at Las Vegas. As a result, there’s a regional arms race among policymakers to keep gambling revenue in state.
Richard McGowan, an associate professor of economics at Boston College who studies the gambling industry, says that each casino opening grows the market, but only slightly. “There are certain markets where you can reclaim revenue from other states,” McGowan says.” The new casino reclaims revenue for the state and that’s about it.”
In June, Moody’s projected that total U.S. gambling revenue going to states would fall 3 percent to 5 percent over the next 12 to 18 months. “The proliferation of recent casino openings, along with future supply additions, will have a further cannibalizing effect on overall industry earnings, despite their contribution to industry-wide gaming revenue,” it said. In July, Moody’s added, “Things appear to be getting progressively worse for US regional gaming operators.” That same month, Fitch was equally dour, saying that U.S. regional gambling “has largely met demand.”
As competition has heated up in the Northeast, Connecticut casinos have seen six straight years of decline in gambling revenue with “no bottom in sight,” the Center for Policy Analysis at the University of Massachusetts at Dartmouth reported. The gambling industry was once considered recession proof: “Until 2008, Las Vegas and Atlantic City had seen gambling revenues fall only once since 1970 — in the aftermath of September 11, 2001.” But in 2008, “gaming revenues began declining on a year-to-year basis in most casino jurisdictions.”
Another way to look at the increased state competition for casino money is by looking at how Atlantic City casinos fared as its regional monopoly slowly crumbled. This report from the University of Nevada at Las Vegas’s Center for Gaming Research charts Atlantic City’s annual “casino win” — or total reported casino revenue. (All numbers in thousands.)
This is the power of monopoly: From 1978 to 1985, Atlantic City gambling revenue grew a mind-boggling 55 percent annually, the report said. But since 2006, revenue has fallen more than 45 percent and table games, after adjusting for inflation, have declined since the 1980s.
That isn’t to say there aren’t still medium-term opportunities in casino-building. Fitch noted that Ohio had cannibalized about one-third of its current gaming revenue from nearby states. Overall, the casino sector now looks like this, per Moody’s. Note strong growth coming in areas where newer casinos are planned or have just been built: