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Pennsylvania table game law is bad news for Atlantic City
The arrival of table games in Pennsylvania’s casinos is likely to bring smiles to cash-strapped state authorities and woes to already beleaguered Atlantic City.
A law recently ratified by Governor Ed Rendell allowing casinos, currently slots-only, to offer table games too will help to balance Pennsylvania’s budget by adding to its annual casino tax revenue, currently just over $1bn.
Larger sites will have to pay a one-off $16.5m licensing fee for up to 250 tables each, while resort casinos will pay $7.5m for up to 50 tables. Revenue will then be taxed at 16 percent, reducing to 14 percent after two years.
Observers expect that collectively the state’s nine casinos will offer about 800 table games from the middle of this year.
The Pennsylvanian market is growing fast. Two new casinos opened in 2009, and a further five could be on the way under rules which – so far – cap the total at 14.
Including the new casinos, revenue was up 28 percent in December on the same month a year ago, or 1.4 percent excluding the two new sites.
But the arrival of table games now means that much of its future growth is likely to be at the expense of Atlantic City, in adjacent New Jersey. Revenue for the 11 casinos there has been falling precipitously – last year it dipped 13.2 percent to $3.9bn, its lowers level since 1997 – and one analyst has characterised table games, which account for 25-30 percent of Atlantic City’s total gaming revenue, as its “last line of defence”.
The only Atlantic City casino to report a revenue increase in December, for example, was Caesars – where table games grew nearly 20 percent, far ahead of the overall 4.4 percent increase.
The change to Pennsylvania’s rules could wipe out Atlantic City’s precious advantage, as could an anticipated similar change in Delaware to the south.
Delaware law-makers are believed to be considering allowing the state’s three racinos to add a total of 150- 225 table games. Competing with Pennsylvania is the objective – but further eroding Atlantic City’s edge would be a potent side effect.
Among the biggest winners from the new Pennsylvania regulations, meanwhile, could be the Sands Casino Resort Bethlehem – only an hour’s drive from New York City. Shuffle Master is also expected to do well in the state through sales of its automatic card shufflers.
