Abstract
This is the first-phase report. In this phase of reporting, we examine the pattern of regional casino gross gaming revenues (GGR) in Atlantic City (AC) and its regional market alongside its relationship to aggregate regional personal income. To give a sense of competition to New Jersey’s (NJ) casinos in the market place, we review the chronology of casino openings and closings both in NJ and nearby in other states. This enables us to ascertain their effects upon regionwide and AC net gaming revenues as well as on casino survival. The main new finding in this report is that there has been relatively little variation over time in the ratio of regional GGR to aggregate regional personal income. Interestingly, this ratio tends to vary between 0.45 and 0.50%, which suggests that the area market for gaming has been saturated. And the main story of the past twelve years, which is rather well known, has been that the successful rise of casinos in eastern Pennsylvania has been at the expense of NJ’s casinos, which had cornered the market prior to 1996. In 2018, NJ’s casinos maintained only about 26.1% of all area GGR. The current (2018) ratio of regional GGR to aggregate personal income is well below its 2013 peak (0.514%) and sits close to its long-term average (0.477%). This indicates either there could be modest room for expansion in the region or that distant markets—like Las Vegas, Monaco, and Macao—have slowly been absorbing more of what used to be a localized market base. Recent data show that last year’s opening of two new casinos in AC seems to have enhanced overall gross gaming revenues for NJ. This marked the first net gains in gross gaming revenue in AC since 2007! Unfortunately, these same two casinos seem to have benefited by cannibalizing from the existing set of AC casinos, all of which experienced GGR declines. Of course, these declines could also be partly attributed to the introduction of sports betting. In the next phase of reporting, we will continue to investigate what drives changes in regional GGR, its relationship to regional income, and the implications for casino viability in AC. In particular, we will investigate the potential causes of variation over time in the ratio of regional GGR to aggregate regional personal income since this appears to be a critical parameter. We will also identify more precisely the sensitivity of gross gaming revenues at NJ casinos to casinos entering in New York City and in Philadelphia. We will also investigate the likely implications of adding one or more new casinos in AC.