An Irene from Massachusetts and one from New York bearing down on AC


Hurricane Irene is pictured over the Bahamas, as captured by the GOES-13 satellite at 11:45 UTC (7:45 a.m. EDT) on August 24, 2011. Irene battered the Bahamas on Wednesday on a track to the North Carolina coast that forecasters say could threaten the densely populated US Northeast, including New York, starting on Sunday. The hurricane, a major Category 3 storm with winds of 120 miles per hour (195 km per hour), pounded the southeast Bahamian islands with winds, rain and dangerous storm surge.

Hurricane Irene ripped off roofs, downed power lines and demolished homes in the Bahamas and killed at least two people in Haiti, as the US East Coast on Thursday braced for its brute force. Packing winds of up to 115 miles (185 kilometres) per hour, the first Atlantic Ocean hurricane of the season brought destruction to the southern part of the Bahamas and roared toward the US coast. Reuters, Daily Telegraph, 8-25-11

Hurricane Irene is ripping up the eastern coast of the United States – it may even tear out the boardwalks of Atlantic City and throw the casino gamblers into the sea.  Okay, that last bit is a stretch; Irene is highly unlikely to cause any where near the amount of damage Katrina did the Gulf Coast casinos or any of the other natural disasters that hit the Gulf region annually.  Irene is causing a great deal of damage, but it will not harm the casinos.  But it does make a good metaphor for another storm threatening the already beleaguered casinos of Atlantic City – the eye of this storm will not hit Atlantic City directly, but it produce wave after wave of impacts for years to come.

This week, new casino legislation was introduced in Massachusetts; and unlike previous gambling bills in the Bay State, this one is supported by both parties, their leaders and the Governor – it is very likely to pass in some form.  The legislation while more conservative that previous versions is fairly aggressive, it calls for four total casinos, possibly as many as 19,000 slot machines and it anticipates significant revenue for the state from both licenses and taxes.

Developers would be required to invest at least $500 million per casino and each casino would have to include a hotel. Casino licenses would be auctioned for at least $85 million. The slot-parlor license would be sold for at least $25 million, and the state would require a $125 million investment for that facility. The casinos would pay the state 25 percent of their revenues; the slot parlor would pay the state 40 percent of its take, and another 9 percent to a special fund to boost purses for the struggling horse-racing industry. Boston Globe, 8-24-11

The lawmakers have backed away from demanding hundreds of millions of dollars upfront as other states have done in the last few years.  Illinois, for example, charged each race track that put in slot machines a fee of $250 million dollars and once famously auctioned a casino license for $500 million – that casino was never built and the state collected nothing.  Although the minimum investment in a casino required by the bill is reasonably high,  the tax rate, while high by Nevada or New Jersey standards, is moderate and what the casinos in Connecticut pay; and that will put the Massachusetts on a level playing field with two of their major competitors, Foxwoods and Mohegan Sun in Connecticut.  The law looks favorable enough to have generated instant interest from the gaming industry – it is being reported that numerous major gaming companies have already expressed interest; Penn National, Caesars, Sands and Mohegan Sun have set out preliminary plans – the Boston Globe lists as many as dozen expressions of interest.  Of course, most operators will want the most desirable location with largest population base – but at first blush, it seems the locations have been well thought out and each should appeal to some gaming operators.

Casinos will not be opening in Massachusetts next week or probably even next year, but when they do, Atlantic City will feel their impact and of course so will Connecticut and other states that have enjoyed the patronage of gamblers from Massachusetts.  Rhode Island is already anticipating an impact, at least one legislator is proposing some response to protect the state’s gaming revenues as much as possible from the impact of casinos in Massachusetts.

There is another storm brewing for Atlantic City and that is New York – the first casino to open on the edge of New York City will open within months, others operated by an Indian tribe will follow, albeit not for years and the  governor of New York has just begun lobbying for expanded gambling legislation; he wants a major gaming expansion in the state – numerous casinos and thousands of slot machines.

This is where the metaphor of the tropical storm fails completely, regardless of the amount of damage a hurricane causes, the storm itself is short lived.  People can immediately begin to clean up and rebuild; when the casinos open in Massachusetts, just as when they opened in Pennsylvania, they will not be short lived, nor will their impact be temporary.  There will be no period of cleaning and rebuilding and the impact when it hits will stay.

So while, Irene will not do much harm to the Boardwalk or the casinos of Atlantic City, impending casinos in Massachusetts and New York will.  The people of AC had best enjoy the lull before the storm as long as they can, because once the storm hits their will be no safe harbor.

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