New Jersey Casinos Hit Hardest (Mostly by Natural Causes) in the USA

May 11, 2013

The State of New Jersey experienced the sharpest decline in gross gaming and tax revenues when compared to the other 21 states which had operational commercial casinos during 2012.

This was one of the key findings of the 2013 State of the States survey published by the American Gaming Association, a trade group headquartered in Washington, DC.

Other outstanding discoveries of the survey included the fact that Philadelphia held on to its title of No.1 racetrack-gaming market in the United States (its gross gaming revenue stood at $835.3 million) – Parx Casino and Racing of Bensalem was in the lead there for the third consecutive year.

Also, the survey found that an increasing number of young patrons (aged 21 through 35) are frequenting casinos – they constituted 39 percent of those polled for the first time and were more attracted to non-gambling amenities such as restaurants or nightclubs.

As a whole, the United States commercial (non-tribal) casino industry grossed a revenue of $37.34 billion in 2012, an improvement of 4.8% compared to 2011, thus signaling the third straight year of growth. Not only that, but last year brought about the industry’s second highest level since 2007, before the effects of recession were felt.

Frank Fahrenkopf Jr., the outgoing president and CEO of the American Gaming Association, expressed optimism and excitement at this particular result of the survey, telling reporters in a conference call that “That’s tremendously good news. You add the impact of casino tax revenues and jobs, [and] both the present and future look bright for the industry.”

New Jersey CasinoFifteen of the twenty-two states that had operational casinos in 2011 experienced an increase in the gross gaming revenues of last year and the main reason that New Jersey was not among them proved to be the impact of Hurricane Sandy. The devastating natural disaster also took its toll on casinos, forcing them to close and further deterring potential customers by keeping tourists away.

These realities, coupled with an increase of gaming activities in neighboring Pennsylvania, allowed for Philadelphia to overtake Atlantic City in gross gaming revenue for the first time in history. “Pennsylvania has been one of the great successes in our industry,” according to Fahrenkopf – he also quoted Caesars Entertainment’s CEO Gary Loveman as saying that the Northeast is an underserved market and that the statistics in Pennsylvania truly reflect that fact.

“But, of course, there is a price for that, and I think Atlantic City has been hit by that,” he added. “Those that live in Philadelphia no longer have to drive to Atlantic City.”

On the East Coast, several states are increasing their casino activities, with New York considering the possibility of adding nontribal casinos, Maryland already doing it and Maine also having an increase in the field; MGM Resorts International is in the process of building a casino in DC. Fahrenkopf prediction is that the competition will increase in the next few years.

However, one gaming aspect that New Jersey seems to be a winner at is the employment of a greater number of additional people: in 2012, the number of casino jobs in the state increased by 5.8%, bringing the total to 34,726. The greater part of this 5.8% growth was contributed by Revel, a company that added 2,000 jobs in a place, as Fahrenkopf described it, “that really needed it”. At the other end of the spectrum, Pennsylvania’s casino jobs saw a 2.7% increase and a grand total of 10,162 employees.

The American Gaming Association’s fifteenth annual report surveyed 300 people aged 21 through 35 who had been at a casino in 2012. This age group had the highest rate of casino visitation, 39%, compared to the general adult population at 34%. Younger clients also wagered online, played poker and tried their luck at the lottery in higher numbers than the general casino public. Online betting is gaining popularity and support in the US nowadays, as three states (Delaware, Nevada and New Jersey) have legalized certain forms of Internet gambling.

The younger population that took part in the survey was also more likely to frequent non-gaming attractions when going to a casino, such as concerts, nightclubs, shopping, spas and pools – Atlantic City and Las Vegas are actively marketing and investing in them.

Fahrenkopf was again highly positive in his remarks when assessing the impact of younger people on the casino industry: “That all bodes well for the future. They are our lifeblood.”

At the national level, this industry employed 332,000 workers in 2012, down 0.9% from 2011; it generated $13.2 billion in wages, benefits and tips.