New Jersey voters will decide the fate of a plan to expand New Jersey casino gambling beyond Atlantic City on Nov. 8.
The ballot measure would authorize two new casinos in northern New Jersey at least 72 miles from Atlantic City, which has had a monopoly on New Jersey gambling since the state legalized casinos in the late 1970s.
A Rutgers-Eagleton poll released in early March showed 49% of New Jerseyans against the casino expansion proposal and 44% for it.
"The public is essentially divided on this," said Poll Director David Redlawsk. "It absolutely could go either way."
Hard Rock International has proposed a casino for Bergen County at the Meadowlands Racetrack in East Rutherford if the constitutional amendment is passed.
The company estimates such a Meadowlands casino would generate $400 million in annual revenue for New Jersey.
Another casino has also been proposed for Jersey City in Hudson County.
Assembly members Ralph Caputo, D-Belleville, Valerie Vainieri Huttle, D-Englewood and Raj Mukherji, D-Jersey City, first introduced the legislation seeking casino expansion into North Jersey last June. It was passed in January by both houses of the legislature.
Caputo and Mukherji argued the benefits of adding two new gambling facilities during a panel discussion at the New Jersey Casino Expansion Compromise Conference hosted by the Guarini Institute for Government and Leadership at Saint Peter's University in Jersey City on March 21.
They said new gambling venues near New York would help keep revenue in the state that is now being lost to casinos in nearby Pennsylvania, New York and Maryland.
"With this outflow of gaming revenues to other states is an outflow of tax revenues," said Mukherji. "We need to recapture those dollars. We need to keep those gaming dollars in New Jersey."
The decision over whether to approve seeking new gambling revenue arrives with Atlantic City gasping for financial breath, facing insolvency that could trigger a state takeover, bond defaults or some combination of the two.
City political and business leaders are not enthusiastic about a proposal they believe would damage its only viable industry.
Mark Giannantonio, chief executive of Resorts Casino Hotel in Atlantic City, said he will work hard to defeat the ballot measure.
In 2014, four of Atlantic City's 12 casinos closed, and Giannantonio estimates two North Jersey casinos facilities would result in five more shutting down. Atlantic City casino operators lost 6.5% in revenue in 2015 compared to the previous year, according to New Jersey's Division of Gaming Enforcement.
"When North Jersey casinos open and five close, what does Atlantic City do?" he asked at the Saint Peter's panel. "Our number one feeder market is North Jersey."
Atlantic City was set to run out of cash flow on April 8 prompting the city government to implement a 28-day pay period to allow time for May tax revenue to arrive to fund the next paychecks. The city's already deep junk-level bond rating was slashed another two notches by Moody's on April 4 because of default concerns and being faced with a $102 million budget deficit.
Mayor Don Guardian has already sought to move Atlantic city beyond its gambling reputation with new corporate offices, state-of-the art clubs, restaurants and entertainment venues. At the Saint Peter's event, he expressed concerns about how casino expansion would impact his city's eight remaining casinos and warned that adding gambling in North Jersey could add extra costs that supporters are overlooking.
"Make no mistake, casinos is a sin industry, while it brings jobs and money, it also brings a lot of problems," said Guardian, who since taking over as mayor in 2014 has pushed to bring more non-gaming businesses to Atlantic City. "If you don't think prostitution, drugs and minor crime comes with the 25 million people that gaming brings to Atlantic City, you are being very foolish. If you think the $20 million in property taxes is going to pay for the police that you need to maintain the casino, again it's very foolish."
New Jersey Gov. Chris Christie has supported the new casinos in North Jersey, but emphasized in a March 31 news conference that the measure will fail unless state lawmakers can agree on a rescue plan to avoid an Atlantic City default.
The city is close to running out of cash.
The Republican governor said he will campaign against the referendum if the Assembly refuses to pass a state intervention bill that would empower New Jersey's Local Finance Board to renegotiate Atlantic City's outstanding debt and municipal contracts for up to five years.
"There is no way voters will approve the expansion of gaming when the only place where gaming has been allowed goes down the toilet," said Christie. "If they see a crisis in Atlantic City that is worsening and worsening and nobody is doing anything how would they ever approve gaming for the northern part of the state?"
New Jersey has the second lowest credit ratings of the U.S. states due largely to pension underfunding. Moody's Investors Service rates New Jersey bonds at A2 with a negative outlook. The state has A ratings from Standard & Poor's, Fitch Ratings and Kroll Bond Rating Agency.
A January report from Moody's Investors Service said New Jersey gaming expansion would be a credit negative for Atlantic City and lead to more casino closures. Analyst Lenny Jones said a casino expansion into North Jersey would place additional credit pressure on Atlantic City and highlights why it needs to accelerate Mayor Guardian's vision of attracting more non-gaming businesses.
"Atlantic City needs to diversify beyond casinos," said Jones. "They have to change."
Jim Kirkos, president and CEO of the Meadowlands Chamber of Commerce, said a Meadowlands Racetrack casino would add an additional destination to go along with the America Dream shopping and entertainment project being developed mall project being developed at the site that he estimates could bring in up to 40 million a people a year. Kirkos added that the success of a Meadowlands casino would also help enable Atlantic City to diversify its offerings and prove beneficial over the long-term.
"We think there is an opportunity to grow a destination in the north part of the state and generate really significant tax revenues for New Jersey and to support Atlantic City," said Kirkos. "We believe the reinvention of Atlantic City in non-gaming resort destination is where the jobs are going to come from there."
