Vol. 3, No. 9, September 2006
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No VLTs
VLTs at the Meadowlands would ultimately hurt the state’s revenue picture.
Recent newspaper articles reported that Governor Corzine, in a meeting with industry representatives, raised the issue of video lottery terminals (VLTs) at the Meadowlands complex in North Jersey. Certain reports have erroneously intimated that the Governor was a proponent of a VLT initiative.
This is not the case: Governor Corzine did not say that he is in favor of VLTs, but merely asked the question how New Jersey can best compete with the emerging jurisdictions of Pennsylvania and New York. It was in the context of this discussion that VLTs were raised.
CANJ believes that the potential impact of competition from our neighbor states is a very appropriate question for the governor to ask, and we welcome the opportunity to discuss this issue with the governor and key legislative leaders. In this article, CANJ’s position on VLTs will be explained.
CANJ does not believe that the best way for Atlantic City to compete with the emerging gaming jurisdictions of Pennsylvania and New York is VLTs at the Meadowlands. While at first blush VLTs may appear to be a viable way for New Jersey to compete with these emerging jurisdictions, a closer look quickly dispels that notion as, at best, a short-term solution that will have negative long-term ramifications.
The rationale behind the proponents of VLTs is that if New Jerseyans live closer to those locations in Pennsylvania and New York than to Atlantic City, they will cross the border to patronize those casinos and racinos, and why shouldn’t New Jersey compete by permitting casinos in places other than Atlantic City? After all, Atlantic City is going to lose those customers anyway.
The truth of the matter is not so simple. Despite any short-term benefits the Meadowlands might enjoy, the entire gaming infrastructure in New Jersey would be undermined by such a step, and it could cause a slackening in the state’s strong and ever-increasing tax revenue stream from Atlantic City.
Ultimately, we believe that there would be an overall net decline in gaming revenues statewide, including in the Meadowlands, which of course is contrary to the intended result.
We acknowledge that Atlantic City will lose some customer visits to Pennsylvania and New York for convenience reasons. However, we believe that the best way for New Jersey to compete with our neighboring states is to promote the uniqueness of our state’s single gaming destination, and to foster the continued development of Atlantic City—which, with its 28-year head start and 12 existing casino hotel destination resorts, is poised for significant continued growth.
VLTs would stifle this growth in Atlantic City, which would be extremely detrimental to New Jersey and its ability to compete with the casinos from neighboring states. There are many reasons that we believe VLTs would be detrimental:
• The Casino Control Act requires Atlantic City casinos to have minimum infrastructure elements (e.g., minimum of 500 hotel rooms) in order to operate a casino. To permit gaming now to occur in locations other than Atlantic City and without the requirement of these capital investments is unfair to those businesses that have made billions of dollars in capital investments in Atlantic City over the years.
• The approval of VLTs would send a message to Wall Street that the rules have changed in New Jersey, creating a less stable investment climate. Less stability equals increased risk, which raises the cost of capital, which negatively impacts future development projects in Atlantic City.
• VLTs at the Meadowlands would force New Jersey to adopt competing public policies—promoting the continued development of Atlantic City versus promoting VLTs at the Meadowlands.
• Atlantic City is in the midst of a significant renaissance and is poised to progress to the next level as a destination resort with billions of dollars of capital investment. To destabilize the economic environment would seriously jeopardize this positive cycle that Atlantic City is on the verge of realizing.
Many state government officials, including Governor Corzine, understand the tremendous economic development benefits that our industry has generated in the past and continues to generate on an ever-increasing basis. This includes billions of dollars of tax revenues, billions of dollars of capital investment, and tens of thousands of jobs. Moreover, these officials understand that Atlantic City is poised to generate even greater benefits in the immediate future and beyond. As such, they also understand the profound detrimental effect that VLTs would cause, not only to Atlantic City, but statewide.
We appreciate their continued support of our industry and our 45,000 employees whose livelihoods are dependent upon the industry’s continued viability and growth.
CANJ will continue to consolidate the support of those government officials who understand these issues and thus oppose VLTs. We will likewise continue to educate the current proponents of VLTs that they are not only detrimental to Atlantic City, but to the entire state.
As this debate continues, we will keep you posted on this issue as well as all other issues that are important to our industry and thus to each of you individually.
