So long, Shinzo; Shady dealings in Atlantic City

The Motley Fool took a gloomy view, opining that “the loss of one of the industry’s biggest proponents in the Japanese government could be the death knell for legalized casino gambling.” That wouldn’t be entirely bad, given that revenue projections are all over the place and government expectations for investment ($10 billion per resort, for starters) are profit-hostile, as were five-year license terms, entry fees for nationals and tiny casino floors. Rather than scrap casinos outright, the government should look to places other than Singapore and ratchet both its cost and revenue expectations accordingly. After all, it has competition close at hand in South Korea and Siberia, not some big-ass regional monopoly. The rollout of casino gambling in Japan has been as big a public-policy screwup as we can recall in the gaming sphere and is a great how-not-to manual. A masochistic few investors—MGM Resorts International, Galaxy Entertainment and Melco Resorts & Entertainment—are still hanging in there, hoping for eventual resolution … and even MGM is backing and hedging, with CEO Bill Hornbuckle talking about a “prudent” investment. So expect another year of snail’s-pace policymaking and then a donnybrook in late ’21, assuming anyone still cares.

The shameful collapse of the New Jersey Casino Control Commission before Eldorado Resorts, keeping anti-casino deed restrictions on the Showboat, Atlantic Club and Claridge Hotel, is playing to raspberries in the Garden State. The bottom-line criticism of the NJCCC was it made a market-based decision rather than a regulatory one, stepping outside of its remit and leaving Caesars Entertainment with a stranglehold on the Boardwalk, able to hang onto four casinos and nix new ones. As Stockton University finance professor Michael Busler put it, “My view is to let the market decide how many casinos should be in Atlantic City.” He’s not alone. “It’s my opinion that the commission should foster an environment that encourages new entrants and competition,” said economist Martin J. Perry, “This includes taking action to remove existing barriers to entry.”

“I think it could cripple one of more casinos,” disagrees former regulatory spokesman Dan Heneghan, who quickly adds, “In fact, I didn’t think that opening two new casinos two and a half years ago was a good idea.” Those two new casinos—Hard Rock Atlantic City and Ocean Casino Resort—are now wildly successful, which seems to run a cart and horses through the ‘too-much-competition’ meme. “The market has simply shown no signs, especially coming out of the pandemic, of the need for more supply,” complains Hard Rock President Joe Lupo. “More supply will simply cause more layoffs of personnel, less revenue, less profitability and less capital reinvestment, which we all know many of the Atlantic City properties desperately need.” After all, the NJCCC hid behind the skirts of Hard Rock and Ocean when trying to defend the indefensible. For time time being—and absent pressure from the Division of Gaming Enforcement to revisit the fishy decision—the market’s only hope is that lawsuits by the owners of the Atlantic Club and Claridge prove fruitful. Meanwhile, Gov. Phil Murphy (D) can’t decide whether smoking is to be allowed in casinos or not. Get it together, Phil.