Written by N. James Brago; Photo Courtesy of Andras Barta
On the ballot for New Jersey voters is a constitutional amendment regarding casinos. The referendum calls for two new casinos to be constructed in North Jersey. The bill comes as New Jersey has been struggling with economic growth which has taken its toll on the amount of money the state has to fund public schools. The two new casinos must be 72 miles away from Atlantic City and in two separate counties. A few questions arise with this proposal. Certain questions (Where will the casinos be built? How will it be built?) beg to halt the amendment.
Why are politicians focusing on building casinos instead of properly funding schools? Some districts are at a disadvantage because of the way New Jersey funds its schools.
There must be a good reason lawmakers made the ballot to have voters choose the fate of two casinos over figuring out how to properly fund schools.
The reasoning behind this ballot initiative is to raise more revenue. Casinos get taxed on their earnings and the money gets added to the budget. However, the fact that Atlantic City’s casinos have been closing and the building of these two casinos will not help Atlantic City sends to the question if our lawmakers are looking in the right direction.
The possible results that these two casinos are somewhat muddy. Some say it would serve no benefit to New Jersey because New York City can open a casino to compensate and 8 new casinos are set to open in the Northeast market.
Additionally, the tax rate that the casinos would have to pay on their winnings is not determined yet. Assemblyman Ralph Caputo(D) from North Jersey has floated 40 percent to 60 percent. Senate President Steve Sweeney(D) has advocated for a lower rate considering the casinos would be a $1 billion dollar investment. However, New Jersey taxes casino revenue at 8 percent.
A 40 percent revenue tax would be substantial for raising revenue but whether this will happen or not is unclear especially when the current revenue tax is 8 percent. How can we estimate the amount of revenue we are going to get, when there is no tax rate?
Proponents of this bill (who are mainly from the cities/counties that will most likely get the two new casinos, Meadowlands and Jersey City) promise economic growth and jobs. Economic growth and jobs in the construction of two casinos. They also states that the revenue from the new casinos would be used to help out Atlantic City which had a 9.5 percent unemployment rate in early 2016. Proponents have predicted that $200 million in reserved aid to Atlantic City.
The promises made are abstract at best. First off, the two casinos that would be built under this amendment are most likely going to be in Jersey City and the Meadowlands, which are 15 miles away from each other.
They will have to share consumers. This decreases their respective profits, especially if they have to pay a tax rate of 40 percent to 60 percent.
Not only do the new casinos have to compete with each other, but they will also have to compete with New York City.
Gambling is not the economic stimulator it once was as Atlantic City has shown. The real way to create jobs and sustainable economic growth is investing in people, not casinos owned by billionaires.
The idea that $200 million to aid Atlantic City will be successful is murky at best considering the indecision on a tax rate and the competitive market.
Overall the idea of raising revenue and using that money to help the struggling Atlantic City is a good idea. In fact, it needs to be done all around our state because New Jersey was recently ranked last in economic growth. Thanks Governor Christie!
The way that we raise revenue and create jobs is important. Opening two new casinos that have to compete with each other and don’t even have a determined tax rate yet does not bode well for either casino jobs or revenue estimates.
Voters will decide these two casinos on Nov. 8. A recent poll suggests it will fail.
Maybe instead of focusing on opening casinos, our lawmakers should address the lack of economic growth in New Jersey. Funding programs that grow small business, reforming drug policy, reforming our criminal justice system, and making sure our schools are properly funded should be the focus of our lawmakers, not two casinos.