By Paul Davies
Last month, Gov. Christie vetoed two bills passed by the New Jersey Legislature that would have allowed sports betting at the casinos in Atlantic City. But on Monday, Christie reversed course and issued a directive that clears the way for sports betting.
Christie's flip-flop is the latest sign he does not have a plan to stop the collapse of Atlantic City's casino industry. If anything, some of the ideas getting floated out of Trenton may exacerbate Atlantic City's woes.
Three casinos - Revel, Showboat, and Trump Plaza - have closed or will close this month. A fourth casino, the Atlantic Club, closed in January. The Trump Taj Mahal recently filed for bankruptcy and is threatening to close by Thanksgiving if it fails to get concessions from its unionized workers.
While the gambling market contracts, Christie's plan to save Atlantic City centers on getting people to gamble more. In addition to sports betting, New Jersey legalized Internet gambling last year. But that has failed to generate anywhere near the $1.2 billion predicted by the state.
Now, Christie and other state lawmakers are mulling whether to build a casino in the Meadowlands. Such a move would siphon more gamblers from Atlantic City. It makes little sense to respond to the string of casino closings by building a new casino.
But when it comes to gambling, such flawed logic passes for thoughtful public policy.
Consider: As Atlantic City's gambling revenues dropped from $5.2 billion in 2006 to $2.8 billion last year, the state approved the building of the Revel casino.
After the economic collapse in 2008, investors walked away from the sprawling $2.4 billion project. Construction resumed in 2011 after Christie agreed to provide $261 million in tax incentives. The 57-story Revel casino, the tallest in Atlantic City, opened in April 2012 to great fanfare.
"The completion of Revel and its opening is a turning point for Atlantic City and a clear sign that people once again have faith in the city's ability to come back," Christie said before the grand opening.
But Revel was a bust from the start. It filed for bankruptcy twice before closing earlier this month. "Rather than serve as a shining example of Christie's economic stewardship, Revel now stands as a 57-story example of failure in a city that has bedeviled New Jersey governors for decades," the Washington Post said earlier this month.
During the so-called summit meeting in Atlantic City on Monday, Christie said increased competition made contraction of the casino industry "inevitable." If that was the case, then why build Revel?
The lack of a clear strategy may help explain why Christie's summit with lawmakers and casino executives was closed to the public. After the private meeting, Christie declined to provide details of what was discussed. Why?
"Because I don't want to," he said.
The lesson here for Christie and other governors is that casinos do not equal economic development. The casino business model is designed to take people's money. In fact, casinos do not produce much economic spinoff and instead divert spending from other businesses. Just look at how little more than 30 years of casino gambling has done for Atlantic City.
Nor do casinos provide sustainable tax revenues for states - which are often lawmakers' main motive to legalize gambling. Thanks to oversaturation, casino revenues have been dropping in a number of states, including Connecticut, Delaware, and Ohio. Even Pennsylvania's once-booming casino market has cooled.
As a result, Pennsylvania lawmakers, like their counterparts in New Jersey, are looking to replace the sagging casino revenues with more gambling options. One measure includes legalizing online gambling. State gambling regulators are also weighing whether to award a second casino license in Philadelphia.
Delaware went down a similar path, legalizing sports betting and online gambling to little avail. Then Delaware gave its three casinos a $10 million bailout in July, on top of last year's $8 million bailout.
As casino troubles mount, many lawmakers in New Jersey, Pennsylvania, and Delaware are looking more and more like desperate gambling addicts chasing their losses.