New York Casinos Spell Doom For Atlantic City … Or Do They?

Same Old Song and Dance

The legalization of casino gambling in Massachusetts wasn’t received with much enthusiasm in Connecticut. Like Atlantic City’s reliance on New York, Connecticut’s two tribal casinos attract many visitors from Massachusetts (about 30% by most estimates). The narrative was the Connecticut tribal casinos would lose up to 40% of their revenue.

The fear was real, and in a classic case of desperate times call for desperate measures, the tribes came up with the idea of a mini-casino near the Massachusetts border. The mini-casino never came to pass, which, if we’re being honest, was probably a good thing for the tribes. 

It’s difficult to assess year-over-year losses post-COVID, but looking at 2018 to 2019 (Plainridge Park Casino opened in 2015, MGM Springfield in August 2018, and Encore Boston Harbor in June 2019), revenue at Foxwoods was down just 5% and 7% at Mohegan Sun. 

Check out: The Largest Casinos in the United States

The Two Things That Actually Matter

As much as it makes perfect sense that new casinos will harm existing casinos, the actual impact is hard to gauge. That isn’t to say cannibalization doesn’t happen when new competition pops up, but there are many factors gamblers weigh when making these decisions. 

There are two driving forces behind most people’s decisions on where to gamble. Those factors are convenience and familiarity. 

Convenience vs. Comfort

People like convenience. As I wrote in a previous column:

No one likes to be inconvenienced, and many people will pay a premium to avoid being inconvenienced. For instance, how often have you seen someone pull into a gas station that is $.10 more per gallon because the one next door has a car or two waiting in line? Or the cheaper station is across the street and requires crossing traffic. 

Basically, the closer a casino is, the better. But I would also caution that distance and time isn’t the only type of convenience. People like to be comfortable, and that comfort can be delivered through familiarity. 

Convenience matters, but people don’t like change either. When they fall into a routine they like, it takes more than a nudge to get them to disrupt that routine. Habits are hard to break.

No one wants to learn a new routine. There’s a certain comfort in knowing precisely what to expect. I like my gym. Yes, I understand the new one is closer and cheaper, but I like my gym. 

After years of visits to Atlantic City, they know where to park, where to enter, where the bathrooms are, where the games they play are located, what minimum limits they can expect to find at different times on different days, what restaurants they like, where the hidden gems are, how busy those restaurants are on show nights, and so much more. 

Non Smoking Casinos in the US: Which Casinos Ban Smoking

The Real Impact of New York Casinos

With new casinos these two forces often come into conflict. Customers with a casino routine might be a lot closer to the new casino – a casino that is also bright and shiny. They will certainly check it out, but remember, they know the old casino extremely well. The new casino might have all the bells and whistles, but that doesn’t mean the visitor will be comfortable in the new surroundings. 

Further, the new casino must persuade the customer to stay. Some customers may be looking for a new home and will be easy converts. However, most will require some convincing.

Yes, the new downstate casinos will act as a chokepoint for New York City residents (why drive to AC when we can stay in the city), but they’ll also have to deliver. 

One factor that isn’t being discussed is what kind of casino experience will these billion-dollar properties deliver. Considering these casinos’ price tag, they may not appeal to the average AC casino-goer. The downstate casinos will be pricey to build and, almost certainly, to visit.