Casinos still seem to be popping up everywhere as seemingly desperate states pass enabling laws, looking to stimulate economic expansion in down-and-out areas or raise tax dollars—anything to overcome the effects of the lukewarm economy on revenue growth.
But this week we have more evidence that casino bets are turning into longer shots especially for older properties—it's become a commodity business already in oversupply with increasing numbers of veteran operators in bankruptcy and shutting down unable to match the ersatz glitz of new competition.
Atlantic City is the poster child—its boardwalk lineup of ageing gambling halls now in accelerated decline (four hotels recently closed, and another shutting down soon with thousands of jobs lost). Even with an East Coast casino monopoly, the south Jersey location offered only a warmed over version of a Las Vegas diversion—attracting busloads of day players working the slots, not the really profitable high roller crowd. For all the talk about urban revival, the State of New Jersey never steered any of the gambling related revenues into meaningful redevelopment of the dilapidated neighborhoods away from Atlantic City's seaside. Now the state is left with a mess and investors with more losses.
In the meantime, Connecticut and later Pennsylvania and Delaware opened casinos, which siphoned off Atlantic City's business. More recently New York and now Massachusetts are in on the game. As a result, the big Indian nation run Connecticut casinos have lost their luster too with the gambler crowd feasting off various new choices closer and more convenient to home. And if they do not want to get into cars, the proliferation of online gambling sites provides an alternative to bricks-and-mortar.
Las Vegas and Nevada, which had the gaming industry all to themselves for decades, are not benefiting either. Now 39 states have either legalized commercial and/or Indian run gambling enterprises all eating into the Strip's business. And Vegas also has been hurt by the propagation of high-end gambling resorts in Asia. The big money from China, Korea, Japan, and Singapore does not have to fly thousands of red eye miles into the desert mecca to land the big games and get the best comp deals.
Even so casino hotel developers are falling all over themselves in New York to get chosen for downstate operating licenses close to the population bonanza within an hour or two drive from the five boroughs, Long Island and Northern New Jersey. The politician talk again is to help bedraggled local economies near the Catskills and off the upstate Thruway, but various more alluring proposals would locate closer to the city line. And what happens to the established Indian Casinos near Syracuse, Buffalo and other out of the way locations when their downstate business starts to dry up? And how will the Yonkers Raceway and Aqueduct slots parlors fare?
In the near term, the new and most convenient gambling complexes will draw business at the expense of the more dog-eared and less convenient, but their half-lives will get shorter and shorter with all the competition. The Vegas model of vacation-entertainment-booze-food-and-themed-hotel casinos is wearing out... Any operators who still try to replicate it in the Poconos or Catskills face lengthening odds…
Just look at the house of cards New Jersey built in Atlantic City.
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Jonathan D. Miller
A marketing communication strategist who turned to real estate analysis, Jonathan D. Miller is a foremost interpreter of 21st citistate futures – cities and suburbs alike – seen through the lens of lifestyles and market realities. For more than 20 years (1992-2013), Miller authored Emerging Trends in Real Estate, the leading commercial real estate industry outlook report, published annually by PricewaterhouseCoopers and the Urban Land Institute (ULI). He has lectures frequently on trends in real estate, including the future of America's major 24-hour urban centers and sprawling suburbs. He also has been author of ULI’s annual forecasts on infrastructure and its What’s Next? series of forecasts. On a weekly basis, he writes the Trendczar blog for GlobeStreet.com, the real estate news website. Outside his published forecasting work, Miller is a prominent communications/institutional investor-marketing strategist and partner in Miller Ryan LLC, helping corporate clients develop and execute branding and communications programs. He led the re-branding of GMAC Commercial Mortgage to Capmark Financial Group Inc. and he was part of the management team that helped build Equitable Real Estate Investment Management, Inc. (subsequently Lend Lease Real Estate Investments, Inc.) into the leading real estate advisor to pension funds and other real institutional investors. He joined the Equitable Life Assurance Society of the U.S. in 1981, moving to Equitable Real Estate in 1984 as head of Corporate/Marketing Communications. In the 1980's he managed relations for several of the country's most prominent real estate developments including New York's Trump Tower and the Equitable Center. Earlier in his career, Miller was a reporter for Gannett Newspapers. He is a member of the Citistates Group and a board member of NYC Outward Bound Schools and the Center for Employment Opportunities.
