April 5 New Jersey's legalization of online
gambling is expected to help stabilize Atlantic City's property
tax base, but it could also further dampen tourist visits to
casinos as gamblers place bets from home instead, Moody's
Investors Service said on Friday.
Atlantic City, once a prominent destination, was overtaken
last year by the neighboring state of Pennsylvania to become the
second-biggest U.S. gaming market after Las Vegas.
Moody's rates the city's general obligation debt Baa1 with a
negative outlook. A spate of bad news has continued to put
downward pressure on its credit rating, but for now the outlook
and rating are unchanged, Moody's said on Friday.
One potential bright spot has been the state's legalization
in February of online gaming for a 10-year trial period.
Under the legislation, computer servers used to host the
gaming websites would be housed within Atlantic City's casinos
so those casinos could accrue the revenues.
That potential revenue boost would help to stabilize the
city's taxable property values, because financial performance is
an element of each casino's market and assessment value, Moody's
Casinos with improved taxable values would also likely be
less able to reduce their tax bills through appeals.
Trump Taj Mahal, for example, appealed its Atlantic City
property taxes every year since 2008, Moody's said.
But the ability to place a bet from home could cause further
erosion of Atlantic City gambling tourism, which has been
dropping since 2005.
The decline is due to several factors, Moody's said,
including new gambling venues in neighboring states, a weak
regional economic recovery, high gas prices and a "stubbornly
high" state unemployment rate, which was 9.3 percent in
Visitors pay hotel taxes and parking fees, which back bonds
sold by the Casino Reinvestment Development Authority.