GAMBLING GROWTH SHOWN IN KEY STATES
Just ask Ohio and Maryland

By Frank Scandale

If you are living in New Jersey, you might think the commercial casino gambling industry is two steps from sliding into the Atlantic Ocean.

It’s not without good reason. Casinos in Atlantic City seem to be closing faster than Radio Shacks. Revenue consistently declines year to year as competition to the north, west and south increases.

If there wasn’t an Ocean to the east, it might be worse.

Yet, if you stand back and look at the industry across the nation, the overall picture is not without promise. Just ask the three companies that are wagering on new casinos in Upstate New York. Among the states that are cause for optimism are Maryland and Ohio, each registering significant double-digit growth figures in 2014.

“When you look at Maryland and Ohio, for instance, it’s growing. Overall there is growth,” says David G. Schwartz, director of The Center for Gaming Research at the University of Nevada Las Vegas. “There seems to be a tradeoff. In 2014, the commercial gaming market grew by 2.14 percent. “

That figure includes casinos and racinos only, but not traditional state lotteries, horse racing and other non-gaming elements.

He cites states like Florida (+8.5 percent), whose racino industry is expanding, and Illinois (+15 percent), which since adding electronic poker in bars has spurred overall revenue growth, as other states that are offsetting the flat or declining revenues in other states.

Ohio and Maryland are growing strong, owing to a variety of reasons. contrasting a dismal scene in New Jersey, where Atlantic City casino revenues have been in a steady decline for years. Revenue in New Jersey has dropped 47 percent since 2006, according to the center’s research reports, when it hit its peak in terms of revenue at $5.2 billion.

Yet, at least one expert still marvels at Atlantic City’s situation and revenue numbers if only because of its unique geographic characteristic: all the state’s casinos are packed into a two or three mile square area at the southern end of the state.

“What is extraordinary is that no place outside of Nevada has that much supply and still does $2.5 billion in business with no local population to sustain it,” said Dr. Izzy Posner, the executive director of the Lloyd D. Levenson Institute of Gaming, Hospitality and Tourism at Richard Stockton College in New Jersey. “If Martians came down and looked at this, they’d say, “What? How’d they do that?’ “

Posner provided historical perspective, reminding us that the legislation to allow legalized gambling in New Jersey in the 1970s was done so to spark the economy in Atlantic City.
“Now, everywhere else that has legal gambling, they spread it around the state. “And Pennsylvania has its licenses so that they are also on the borders of New Jersey.”
The competition is what is sparking growth nationwide in the industry, Posner said.
“A lot of that decline (in Atlantic City) did not wash away with the incoming tide. It kind of spread around a bit.”

Garden State, meet the Buckeye State.

For Ohio, a relative newcomer to the gambling industry, the gains are strong. Experts point to the growth due to its continuing additions each year.

With four fully licensed casinos now and seven racinos scattered around the state, Ohio has benefited from growth in properties from eight in 2013 to 11 last year.

Ohio, which entered the casino and racino business in 2012, now boasts four fully licensed casinos and seven racinos, with total revenue for last year topping $1.4 billion, up from $1 billion the year before, or 36 percent.

“If you look at the total revenue of the tracks and casinos, we have more properties open than last year,” explained Jessica Franks, director of Communications for the Ohio Casino Control Commission. “All four casinos are up and running for a year or more now. And the last racino opened in early Fall last year. That accounts for some of the growth.”

In Ohio, the racinos and lotteries are overseen by the state’s Lottery Commission, explained Marie Kilbane of that office’s communications department. The state is just starting to get a fix on what the potential growth might be in the state.

“You need to get your sea legs first to figure out the marketplace and now that all the operations are working, you can see how the Ohio market bears with having the VLT (Video Lottery terminals) entertainment across the state,” Kilbane said. “The gambling game is always changing in reaction to economic conditions.”

Ohio has approximately 10,500 VLTs in operation today.
Meanwhile, Maryland, where the state operates five casinos (a sixth is on the way next year), saw its February revenue this year jump 25 percent from the same period a year ago, according to the Maryland Lottery and Gaming Control Agency, which released the latest figures last week.
With nearly 9,000 slots and almost 400 table games, the state’s casino business kicked of with the inaugural opening of its Hollywood Casino Perryville in 2010. Even the Center for Gaming Research referred to Maryland’s gaming industry as “one of the most talked about gaming markets on the East Coast.”

As it nears its five-year anniversary this September into the gaming arena, its monthly revenue is robust, taking in $83 million in revenue in February alone. However, agency spokespeople explain that year-to-year comparisons are difficult, as Maryland has added one new property each year since its inception, which also contributes to the overall growth as more casinos come on line.

Maryland’s revenue registered $931 million in all of 2014, up from $745 million in 2013, according to the Center for Gaming Research.

Levenson’s Posner concurred on the Maryland and Ohio reasons for growth, and expounded on the positive revenue of Florida and Illinois.

He cites the demographics and growing population of Florida, now the third most populous state with 19.9 million people, according to Census figures. “If you look at the last couple of winters in the Northeast, it’s really helping Florida. And think about the wealth going there. You have a lot of discretionary income and a lot of seniors.”

As for the future of New Jersey’s casino industry, Posner cautioned that the ongoing speculation about casinos in the Meadowlands in North Jersey, while tempting, is not without speed bumps.

“Obviously the northern part of the state is attractive. There’s a lot of red meat there,” he said. “If you are a lion, it’s a good hunting ground. It’s a densely packed part of the state and if you add the wealth there, it is very attractive.”

Though voters’ approving such an expansion is not, in golf parlance, a gimme, he said.
The last poll by the Levenson Institute last year found voters were against it by a 2-1 vote, however, that included a large number of undecided.

And then there is New York City and those politics. New York’s legislation currently prevents a casino from going into the New York City area for another seven years.

“Would New York sit still if it saw the Meadowlands getting a casino?” he asked. “So before anyone puts a billion dollars into North Jersey, you have to take the region into account.”