Atlantic City state report suggests capping the number of casinos

Now that the casino market has stabilized after a 10-year stretch, which saw gaming revenues cut in half and five properties close, some experts and officials believe now may be the time to review existing regulations to prevent another declining period.

The state’s transition report on Atlantic City, co-authored by special counsel Jim Johnson, recommended policymakers examine whether regulatory reform is necessary to ensure the gaming market’s stability and allow it to respond to competition. The report suggests exploring the idea of capping the number of casinos or the total capacity of gaming parlors in the city.

“Atlantic City’s fortunes remain closely tied to the health of the casino industry,” the transition report states. “The shuttered casinos now haunting the Boardwalk are powerful reminders that while there can be significant benefit from learning lessons from failure, there can also be devastating costs to forging ahead without heeding those lessons.”

Presently, two state entities regulate the industry: the Casino Control Commission, which is responsible for issuing licenses, and the Division of Gaming Enforcement, an arm of the Attorney General’s Office charged with maintaining the industry’s integrity.

James T. Plousis, chairman of the Casino Control Commission, said in an email the agency “has reviewed the (transition) report’s recommendations and is committed to working with the (state Department of Community Affairs) and other relevant agencies to assess the best path forward for Atlantic City,” The Press of Atlantic City reported.

The idea of strictly regulating the Atlantic City casino market goes back to 2014, when state lawmakers representing Atlantic County introduced legislation that would limit the number of casino licenses issued to any person or entity. State Sen. Chris Brown, R-Atlantic, sponsored the bill for that legislative session, which was referred to the tourism committee in 2018 and has not moved since. The Casino Control Act used to limit the number of licenses any one person or entity could hold, but the language was lifted during the industry’s heyday in the mid-1990s.

The Casino Control Act requires the commission to consider whether issuing a new license or permitting the sale of a property to an existing license holder creates an “undue economic concentration,” but has never denied an application on that basis.

Bart Blatstein, owner of the Showboat Atlantic City Hotel, has proposed circumventing a deed restriction on the Boardwalk property that prohibits gaming and stated his intention to build a new casino facility on an adjacent lot to his property. If successful, Blatstein’s project would result in 10 casino properties in Atlantic City.

After Trump Taj Mahal Casino Resort closed in October 2016, the Atlantic City casino market was left with seven operational properties. That same year, the industry reported its first increase in total gaming revenue in nearly a decade.

The Atlantic City casino market had its third consecutive year of total gaming revenue growth in 2018, the first such period since 2004-2006, when the industry reached its peak of $5.2 billion. In 2018, total gaming revenue was $2.9 billion and increased 9.2% over the previous year, the largest year-over-year jump since 1995. That growth has continued through the first quarter of 2019.

Most experts attribute a significant portion of the recent growth to two major events in June: the legalization of sports betting in New Jersey and the dual openings of Hard Rock Hotel & Casino Atlantic City and Ocean Casino Resort. In July, gaming analysts expect revenue numbers to begin more accurately reflecting the state of the industry.

Last week, Lt. Gov. Sheila Oliver said the state's takeover of Atlantic City will remain in place for the full five-year period envisioned by former Republican Gov. Chris Christie in November 2016. The resort city will remain under state control through 2021.