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Apr
7th

Internet Gambling Could be Double Edged Sword For Atlantic City

According to a recent Reuters report Moody’s investor service said that while New Jersey’s legalization of internet gambling may help stabilize Atlantic City’s property tax base it may also further cut tourist visits to Atlantic City as gamblers choose to place wagers from home. Many in Atlantic City are worried that online gaming will hurt already suffering casino revenues. For years Atlantic City has been pressured by a combination of factors.

Last year Atlantic City, once a thriving gambling destination, was overtaken by neighboring Pennsylvania as the second largest gambling market in the United States after first ranked Las Vegas. Moody’s has rated Atlantic City’s general obligation debt at Baa1 with a negative outlook. Recently the brand new upscale Revel casino and resort was forced to file for bankruptcy. More bad news has kept the pressure on Atlantic City’s credit rating downward and for now Moody’s says the outlook and rating will remain unchanged.

Moody’s said a potential bright spot is the legalization of internet gambling in New Jersey. While Nevada plans to limit online gaming to poker New Jersey plans to offer a variety of games including internet bingo, slots and other casino games. In February Governor Chris Christie signed a bill legalizing internet gaming for 10 years with annual reviews. Because of New Jersey’s constitution that limits all gambling to Atlantic City all servers used to take wagers in the state must be located in Atlantic City casinos. Several casinos have formed partnerships with European online gaming companies with years of experience in the industry.

The casinos will receive all of the revenues generated by their operations. State officials hope that online gaming revenues will improve the taxable values of the casinos. Casinos with improved values will be less likely to appeal their property taxes. Since 2008 the Trump Taj Mahal has appealed its property taxes every year according to Moody’s. Some see internet gambling as a double edged sword. While the revenues from internet gaming may help some casinos with property taxes is could also further erode the city’s gambling tourism.

Since the first online gaming site will not be operational until later in the year it is not possible to predict whether Moody’s forecast is accurate. Moody’s says the decline is due to competition from casinos in neighboring states, a weak national economy, high fuel prices and a “stubbornly high” unemployment in the state.