Internet gambling a possible saviour for Atlantic City casinos

There was plenty to chew on at the East Coast Gaming Congress on Wednesday, especially when a panel of Wall Street analysts gave the investment community view that Internet gambling could be a solution to the Atlantic City seven-year losing streak.

Allied to other developments such as the $35 million Margaritaville-themed complex officially opening this week, the online gambling initiative in the state could help stabilise and improve the situation, they opined.

The Wall Street experts suggested that Internet gambling in the state could deliver $600 million in annual revenues, but with the caveat that the reaction of the playing public has yet to assessed.

Influential Macquarie Capital executive David Berman said: “I’m probably one of the more bullish people on this. It’s a big boon for Atlantic City and New Jersey.”

New Jersey Assemblyman John Burzichelli said that online wagering is key for the revitalisation of Atlantic City following six consecutive years of decline in gambling revenue. He flagged his doubts that Governor Chris Christie’s predictions of $180 million in annual tax revenues would be achieved, however.

“Frankly, sitting on the budget committee, I think that’s overly optimistic. But there will be new money. There will be new excitement,” the politician observed, adding that taxes from internet gambling would go towards state programs benefiting New Jersey’s senior citizens and disabled residents.

The high profile New Jersey gambling lobbyist William Pascrell III, forecast that Internet gambling will create 2,000 new jobs in New Jersey in the first year alone. The prospect of so many new jobs has provided a powerful incentive for politicians to support Internet gambling, he said.

RBC Capital markets md John Kempf appeared to agree, estimating that Internet gambling could be a $500-million-to-$600-million-a-year market for New Jersey.

However, other assessments differed, providing a wide range of possible annual revenues.

The CEO of land gambling giant Caesars Entertainment, Gary Loveman, said that gamblers were becoming increasingly savvy on computers and communication devices and channels, and demanded the convenience of internet gambling.

His company is actively involved in developing online gambling business opportunities, and he noted that websites would have to be responsive to player requirements.

Loveman added that his preference and hope is for a federal solution to the online gambling legalisation problem, but his company was prepared for all eventualities.

The prospect of interstate compacts was also discussed at the conference, with the consensus appearing to favour a system where states that had embarked on legalisation should be able to negotiate player-sharing deals with like-minded states.

One analyst, Gil White, said that deals in this area could see New Jersey emerge as the regional hub for online gambling, bringing additional benefits to the state.

Online gaming operators in New Jersey will have to exercise significant marketing muscle in support of online gambling activity, said Eugene Johnson, a senior vice president of Spectrum Gaming Group, noting that the internet gambling demographic centred on a younger, wealthier and better educated punter than the typical customer at land-based casinos.

Keith Smith, president and CEO of the Boyd Gaming Corp., which has already cemented partnership deals with leading online gambling companies in Europe, said that Internet gambling will expand the market – not cannibalise it, as some fear.

“It is a way to bring a new customer here – a customer who has not made Atlantic City their destination of choice for entertainment,” Smith said.

Several panellists commented that online gambling gives New Jersey a major advantage over other legalising states because it has a reasonably large gambling population, and the online gambling legalisation law has not restricted the offering to just online poker, as is the case in Nevada.

New Jersey’s proximity to New York also means that it will not be hard for determined punters to arrange to play from within the state borders.