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The year 2020 is here, and with it comes a new set of challenges for the New Jersey gambling industry. Here are the three big stories to look out for over the coming months.
Caesars-Eldorado merger to change Atlantic City landscape
Perhaps the biggest story entering 2020 is the pending merger between Caesars Entertainment and Eldorado Resorts. The $17.3 billion merger still has to be given approval by New Jersey and federal regulators, but the deal is expected to go through by the end of the first quarter. If all goes to plan, the partnership will form the biggest gaming company in the United States, with some 60 casino properties around the country.
Caesars Entertainment owns three Atlantic City casino properties in Caesars, Bally’s, and Harrah’s. Eldorado owns the Atlantic City Tropicana. The proposed merger would see Eldorado take ownership of all four properties, although they would operate under the Caesars name. The new company created with the merger would also hold three deed restrictions on hotels in Atlantic City that currently do not have casinos but have had them in the past.
Competition is coming from PA and other states
Atlantic City casinos had a great year in 2019 in both land-based operations and online gambling. Still, there is trepidation about the future of the Atlantic City casino industry due to the scale of regional competition and the emerging markets in nearby states. Pennsylvania has already enjoyed solid casino growth and the LIVE! Hotel and Casino in Philadelphia, comprising some 2 million square feet of floor space, is expected to give the PA gambling industry a big boost when it opens later this year.
Bob Ambrose, a consultant in the casino industry and adjunct professor of casino management, recently stated, “The uptick in revenue this past year from product diversification has helped to stabilize this fragile market temporarily.” He went onto say that Atlantic City casinos can’t be complacent because “economic-competitive pressures [will] continue from an already oversaturated northeastern market”.
Projections have shown that New Jersey may overtake Nevada as the gaming capital of the United States. However, sports betting is now legal in 20 states, as well as Washington DC, and nine more states are expected to legalize it this year. With more and more states legalizing sports wagering, New Jersey will have more competition from both land-based and online sportsbooks.
Continued growth of sports betting and online gambling
Again, New Jersey had a banner 2019 when it came to gambling revenue. Sports wagering and online gambling accounted for almost 18% of total revenue in the Garden State for the first 11 months of last year. (The revenue figures for December 2019 have not yet been released). There was a handle of $4 billion for sports bets in New Jersey that generated $111 million in gambling revenue as well as $13.7 million in taxes for the state. NJ online gambling enjoyed a 61% increase in handle compared to the first 11 months of 2018.
The major growth for the New Jersey online gambling industry in 2019 coincided with the first year of legal sports wagering in the Garden State. In excess of 80% of sports bets in NJ were made via the internet, and that trend is expected to continue this year.