N.J. online gaming legislation called Atlantic City ‘lifeline’

New Jersey's online gaming legislation, which is sitting on Gov. Chris Christie's desk, may be the last hope of saving the Boardwalk gaming market, a gaming analyst told investors Thursday.

In a research report, Wells Fargo Securities gaming analyst Dennis Farrell Jr., called legalized online gaming "a lifeline" to Atlantic City casinos, which have experienced six straight years of declining gaming revenues in a market that has lost more than 40 percent of its value.

Christie has until Feb. 4 to take action on an online gaming bill approved in December by New Jersey lawmakers. The measure allows licensed Atlantic City casinos to operate online gaming websites catering to state residents and customers wagering on computers located within New Jersey's borders.

"We believe the size of the online market could be almost half of the existing New Jersey gaming market's revenue," Farrell told investors. "Online gaming sites operated by state casino operators will lead to job creation and drive visitation to Atlantic City."

Farrell said Atlantic City casinos operators, such as Caesars Entertainment Corp., which owns four of the market's 12 casinos, and Boyd Gaming Corp., operators of the Borgata, would gain an edge over casino competition in neighboring states.

The companies, Farrell said, could cross market their online offerings with their gaming and nongaming amenities, "providing a significant advantage over Delaware, Pennsylvania and New York gaming facilities."

Christie has made saving Atlantic City's casino market a key initiative in his first term as governor. However, he vetoed a similar online gaming bill last year.

Christie has not said if he will sign or veto the bill. Earlier this week, on a New Jersey radio show, he told listeners, according to a transcript posted on NorthJersey.com, "I've got to make a decision very soon. I haven't made a final decision yet."

Farrell said Christie was concerned the legislation would not help Atlantic City and could lead to problem gambling.

NorthJersey.com columnist John Brennan wrote that Christie "does not seem to have strong pro- or anti-gambling sentiments. So he has a challenge here: personally, he doesn't like this bill and doesn't seem to think it will help at all."

Farrell estimated New Jersey's online gaming market could grow to $1.5 billion in gaming revenues over the next five years, which would provide up to $150 million in annual tax revenue to the state.

Atlantic City casinos produced $3.05 billion in gaming revenues in 2012, down from the apex of $5.2 billion in 2006.

"We believe all New Jersey license holders will benefit, but properties with strong brands and gaming facilities will likely see the most upside," Farrell said.

Borgata and the Caesars' properties, "could capture up to 50 percent" of the online gaming market. Caesars owns the popular World Series of Poker brand.

Meanwhile, one of the bill's provisions allows offshore gaming companies to apply for a New Jersey casino license, which could open the door for PokerStars owner the Rational Group to buy the Atlantic Club.

The company, based in Isle of Man, filed paperwork to acquire the financially troubled casino on Jan. 15.

Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871. Follow @howardstutz on Twitter.