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Feb
24th

Fitch Says Internet Gaming Will be Positive For Borgata and Caesar’s in Atlantic City

During the global economic crisis Fitch’s rating service has been in the news several times. Fitch made headlines when the company downgraded Greece’s and Spain’s credit ratings and threatened to downgrade the ratings of several countries including the United States. Fitch ratings believes the legalization of internet gambling in New Jersey will be a positive ratings consideration fer the Borgata and Caesar’s in Atlantic City. Under New Jersey’s internet gaming law all of the servers would be located in Atlantic City casinos and all wagers would take place in AC casinos.

Fitch has rated Borgata’s Issuer Default Rating (IDR) ‘B-‘ with a stable outlook and Caesar’s ‘ IDR ‘CCC’ with a Negative Outlook. On February 7th Governor Christie vetoed the latest internet gaming bill and asked for modifications including a tax hike from 10% to 15%. The leaders of the New Jersey house and senate said they plan to proceed with the revised bill and hope to have a bill signed the first week of March. Games will be exclusively offered by Atlantic City casinos and there will be no limits on the types of games offered. This is good news for internet bingo players in the state who thought the online games would be limited to poker.

The New Jersey internet gaming bill is summarized in Fitch’s Online Gaming Monitor. The report also provides an overview of recent internet gaming trends and a list of companies that may benefit from the expansion of internet gaming in the United States. The passage of the internet gaming bill is a positive for the Atlantic City gaming market according to Fitch. Internet gaming hay help reverse the trend of players choosing gambling options closer to home in Pennsylvania, Delaware and Maryland. Fitch said that Atlantic City may experience some cannibalization from online gaming but figures should remain positive if AC casinos have the ability to cross market between land based casinos and internet casinos.

Atlantic City casinos should also be helped by the established popularity of internet poker and hopefully will have the ability to recapture players traveling to casinos in New York and Pennsylvania. In Fitch’s view the prospect of participating in internet gambling has been keeping unprofitable casinos open. If online gambling was removed marginal casinos like the Atlantic Club would be forced to close. Fitch expects most of the internet gaming revenue to go to well-known casino brands like Borgata and Caesar’s. It remains to be seen just how profitable internet gambling will be for New Jersey.