Pennsylvanians gamble closer to home

Joel Rose Jan 19, 2010
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Pennsylvanians gamble closer to home

Joel Rose Jan 19, 2010
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Steve Chiotakis: Delaware will soon begin allowing table games in its casinos. Same for Pennsylvania. Voters in Ohio recently approved gaming, and Massachusetts could be next. So how much gaming can the East Coast support? Joel Rose filed this report.


Joel Rose: As soon as it opened in 2008, the Mount Airy Casino Resort in eastern Pennsylvania started luring gamblers away from Atlantic City.

Rose:

Did you ever go to Atlantic City before they opened up here?

Rosemary Jensen:

Yeah, yeah, yeah.

Rose: Do you go there now?

Jensen: Yeah, not as much though.

Rose:

How come?

Jensen:

Closer!

Brian Chambers: You know when you lose in New Jersey, that long drive home, you have a lot of time to think about it.

But last year, the Mount Airy Casino was on the losing end. Revenue was down nearly 7 percent after another new casino opened up just 40 miles away in Bethlehem, Penn.

George Toth: We had a lock on the Allentown, Bethlehem market. So when the Sands opened, you’re gonna lose a lot of that market on convenience gaming.

George Toth is the CEO of Mount Airy Casino. He says gamblers around here have lots of options.

Toth: Well you could get to approximately 22 casinos within a two, two and-a-half-hour drive of central Jersey. So this area and this region, we’re pretty well getting to the point of saturation.

Earl Grinols: This is part of what I call a race to the bottom.

Earl Grinols teaches economics at Baylor University. He says the race starts when one state tries to draw gamblers away from other states in order to attract more tax revenue.

Grinols:They may succeed in that for a while, but almost inevitably, the neighboring states set up their own casinos. The long-run equilibrium is that no state gets any other state’s money, but all states end up with some of the social costs of gambling.

Those social costs include lost productivity and higher law enforcement costs. So far, the big loser appears to be New Jersey. Revenues at Atlantic City casinos were off by double-digits last year, their biggest drop ever. And things may only get worse once Delaware and Pennsylvania start allowing table games.

Here’s Mount Airy Casino CEO George Toth:

Toth: In our market in North Jersey and New York, we can’t fulfill the desire right now to play table games. So their trips are going to Atlantic City. Once we can fulfill that desire to play table games, they’re coming to Mount Airy.

At least, until somebody opens a casino that’s even closer to home.

In Philadelphia, I’m Joel Rose for Marketplace.

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