Pennsylvania's growing gambling industry could surpass struggling Atlantic City, N.J., to become the nation's second-largest gambling market sometime next year, an analyst told a gambling forum Tuesday.
Casino operators, financial analysts and government officials met for the second day of the Pennsylvania Gaming Congress and Mid-Atlantic Racing Forum at a downtown hotel, discussing the state's growing industry and debating whether Pennsylvania should put a moratorium on casinos due to a possible saturation in the regional market.
Andrew Zarnett, a managing director at Deutsche Bank Securities, estimated Pennsylvania could overtake Atlantic City as the nation's second-largest gaming market behind Las Vegas sometime next year. Last year, the 10 casinos in Pennsylvania took in about $2.5 billion in revenue, while the 11 gaming facilities in Atlantic City took in about $3.6 billion _ but the two locations are going in different directions.
For years, Atlantic City was the only option gamblers in the eastern half of the United States had if they didn't want to hop a plane to Nevada. The first New Jersey casino, Resorts, opened in 1978. There are 11 casinos in Atlantic City, with a 12th, the half-finished Revel, due to open in mid-2012.
But what really hurt was the advent of gambling in Pennsylvania, where the first slots parlor opened in the Philadelphia suburbs in 2006. That casino, and the others that rapidly followed, touched off a revenue decline for Atlantic City that is now in its fifth straight year. The Pennsylvania casinos continue to siphon off some of Atlantic City's main customers who can now gamble much closer to their homes rather than driving two hours to the Jersey shore.
Slots parlors did the initial damage and the addition of table games to Pennsylvania casinos last July increased the competition. Casinos in New York and Delaware are also competing for Atlantic City's customers and dollars. Atlantic City has lost nearly a third of its business over the past four years, falling from $5.2 billion in revenue in 2006 to $3.6 billion in 2010.
Pennsylvania overtook New Jersey in slots revenue in the middle of last year, but New Jersey is still bigger when it comes to table game revenue, said Doug Harbach, a spokesman for the Pennsylvania Gaming Control Board.
Now, Zarnett and others at Tuesday's forum said Pennsylvania may want to consider having a moratorium on new casinos _ including a second open license in Philadelphia _ because of the possibility the market could get saturated.
"Let's make the existing folks stronger and reinvest in the existing properties," said Alex Picou, a managing director at FBR Capital Markets & Co.
Several Pennsylvania casino operators at the conference said that, while their customers still go to Atlantic City for the experience, they have definitely put a dent in the city's business.
"Atlantic City has worked very hard for 30 years to develop this as a feeder market," said Wendy Hamilton, general manager of the SugarHouse casino in Philadelphia, adding that the casino's location near the Benjamin Franklin Bridge that connects Philadelphia to New Jersey also helps lure New Jersey gamblers.
Hamilton also pointed out that five years ago, she would have trouble attracting dealers from Atlantic City, but now that's not a problem.
Nevertheless, with Ohio set to be the latest state in the region to add new casinos, Zarnett said that Pennsylvania may be wise to consider putting a moratorium on any more casinos now because of concerns about possible saturation.
"You kind of just go slow from here," he said.
Associated Press writer Wayne Parry in Atlantic City, N.J., contributed to this report.