Will Tourism in Atlantic City Be Hurt By Online Gambling?

• Published: May 8, 2013
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What could the possible effect be of New Jersey legalizing online gambling? Well, it sounds good from the perspective of revenues coming into the state's coffers, but could there be a negative effect on tourism itself in Atlantic City? Well, Moody's Investors Service seems to fear that very scenario.

There is a little feat itself on the Boardwalk, and that is because it has been losing customers to outside, opposing forces. For years one of the major feeder markets for Atlantic City has been the state of Pennsylvania, specifically the area in and around Philadelphia. Well, the Keystone State decided that it did not want all those gaming dollars to leave the state, and now the area is serviced by a number of casinos. When you consider that there are also gaming facilities in Delaware, which has also just legalized online gambling, and there are a lot of people who aren't willing to make the drive anymore.

Pennsylvania has now surpassed Atlantic City as the nation's second largest gaming market, and that is indeed a sobering thought for those in the Garden State. That is part of the rationale behind New Jersey's attempt to bring online gambling to reality, not to mention sports betting.

But Moody's, taking a look at the overall economy, as well as the notion that if customers could stay at home they would not bother visiting a physical casino, has downgraded the corporate family rating of Caesars Entertainment, one of the players on the Boardwalk, from Caa1 to Caa2.

The state legislature, as well as Governor Chris Christie, is sensitive to the fact that those who have invested in New Jersey gaming had to be kept to the forefront, so they are the entities that are in line for online licensing, and the servers for the games have to be located on the casino premises. That will bring in additional revenue; however, it doesn't, in and of itself, do anything for the other aspects that surround tourism in the city, namely the rentals of hotel rooms, parking fees and the commerce that takes place in areas of the resorts other than the casino, and with local merchants.