Online Gambling Surge Poses Threat to Atlantic City’s Brick and Mortar Casino for 2022

Online Gambling

The global pandemic has changed the face of the gambling industry in Atlantic City. Land-based casinos had to change their business practices to stay alive throughout the pandemic and the lockdown and social distancing restrictions it enforced. These changes continue to challenge the nine land casinos in the city even in 2022. 

In November 2021, seven Atlantic City casinos reported declines in the amount of money they won from their gamblers. The figures were lower when compared to the same period in 2019. The revenue decline is because of the increase in online casino gaming and online sports betting. 

As a consequence to Covid-19, land-based casino activity has spiralled down throughout the year. Conversely, online gaming profits continue to witness substantial growth with various operators offering both a huge variety of games and easy payment methods to punters.

Land Based Casinos Suffer

The 107-day lockdown of 2020 forced many Atlantic City Casinos to offer online gambling products to stay in business. They continued to offer online gambling services in 2021, and the number of players using their smartphones, tablets, and laptops to play online casino games increased. Despite this, casino entertainment companies have to balance technology and marketing property to avoid the cannibalization of land casinos. 

Casino Association of New Jersey President Joe Lupo said that the Covid-19 pandemic harmed the gambling industry throughout 2021 and may continue to do so in 2022. Lupo is also the president of the Hard Rock Hotel & Casino in Atlantic City. 

Lupo said that the land casino winnings dropped 5.5% in 2021 through November. Simultaneously, online casino revenue continued to increase as third-party operators acquired a larger share of the online casino gaming market. Online gambling now generates a lot of taxable profits for the state.

Tony Marino, the writer of a newsletter on casino trends and tourism and a former executive of Atlantic City Expressway, opines that the success of online gambling comes with disadvantages too. He explains that online gambling threatens gambling in person by preventing players from visiting hotel-casino resorts. This trend hurts land-based gambling, retail establishments, entertainment venues, and casino restaurants. 

Marino says that the biggest challenge the brick-and-mortar casino gaming industry faces in 2022 is maintaining leadership in Internet gambling at the national level while simultaneously marketing Atlantic City as a land-based gambling hotspot. 

Threat Facing Atlantic City Casinos

The threat facing land-based casinos is real. Bob McDevitt, a union president, claims that Atlantic City casinos need tax breaks to save the jobs of thousands of casino employees. 

The Covid-19 pandemic shut down Atlantic City casinos, and experts fear that the government may impose lockdown restrictions in the future to prevent infections. The casinos now function with fewer employees, and several casino workers are in danger of losing their jobs. 

Steve Sweeney, the outgoing state senate president, has heard that four of the nine casino resorts in Atlantic City may shut down because they can no longer cope with the financial strain caused by the pandemic. If these casinos shut down, thousands of people will lose their jobs. McDevitt speaks of the need to stabilize Atlantic City’s gaming and entertainment venues to prevent job loss and economic downfall. The only way to save the industry was by giving it tax relief. 

So Atlantic City lawmakers recently passed a tax break bill permitting casinos to make payments instead of property taxes to the education system, the county, and the city.

Reasons to Demand Online Tax Cuts

Atlantic City casinos had reasons to demand a reduction in online tax obligations. The pandemic has led to an increase in online gambling revenue. But casinos in New Jersey pay 15% of their online gambling revenue as taxes to the state, while the tax rate is only 8% for land-based casinos. 

Online casino gaming and online sports betting are legal activities in New Jersey, accounting for 46% of the gambling revenue. Casinos are making huge profits from receiving online bets, but they have to pay a higher tax rate. Now the pandemic has allowed them to demand online gambling tax relief. 

Atlantic City casinos argue that launching online casinos is expensive and that they have to share their profits with host casinos, software developers, game providers, and many others. In addition, they have to pay taxes on revenues, which is why they wanted tax cuts. 

The New Jersey Casino Association states that the tax relief can save thousands of casino jobs, stabilize the gambling market, and improve the city’s infrastructure.