The good news: The conversation about whether to allow casino gaming outside Atlantic City is taking place at some of the higher levels in state government.
The bad news: That discussion has led to ideas like the recently introduced bill to levy a 66 percent tax on gross revenue for a North Jersey casino.
This is the problem with gaming in New Jersey: Through Atlantic City, the Garden State held an East Coast monopoly on gaming for so long that it’s of the mind that casinos can again become a $5 billion-plus industry every year. Only in a place with no competition would a casino operator agree to a tax rate like that.
While a Meadowlands casino 10 years ago might have helped fend off the wave of competition that’s been having Atlantic City’s lunch since 2007, the thinking behind such a facility now would be keeping North Jersey gamblers — several hours from Atlantic City — playing here, as opposed to in New York, Pennsylvania or Connecticut. To get such a casino built, you entice investors with a realistic tax rate, not one that’s more than seven times higher than the 9.25 percent rate charged in Atlantic City.
There is precedent for such a huge tax rate, at least for slot machines. Maryland levies a 67 percent tax rate on revenue from slots. But we’re guessing New Jersey gamblers who leave the state for slots are going to New York (about 35 percent) and Pennsylvania (55 percent), not all the way down to Maryland. And the odds of a casino developer agreeing to such an astronomical rate in a state where the upfront and development costs far outstrip anything in Maryland — even after the obligatory incentive from the Economic Development Authority — are about as poor as beating the house in blackjack. Even Paul Sarlo, a sponsor of the bill, conceded to The Star-Ledger that the number was probably too high. That’s even more the case when a prospective developer considers what happened to Revel, that $2 billion gleaming tower that, a couple years after opening, may soon shut for good.
All this is for naught if the state doesn’t put a referendum on the ballot in November 2015. But it’s also for naught if the tax rate keeps developers away. Let’s hope Trenton realizes we can’t tax our way back into a monopoly, and settles on a more realistic figure.