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Gambling Affect Hospitality Industry

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Michael Jean-Charles

Professor Jim Booth

MGS 3200-01

December 3, 2018

Gambling Affect Hospitality Industry

Gambling became legalized in New Jersey around May 1978 and it took 2 tries but finally got approved, which brought upon a new scene for the hotel industry in Atlantic City, NJ. This was when the casino resorts began to start boom due to legalization of gambling.

“The long view of legalized gambling in New Jersey shows casinos ushered in decades of prosperity for both Atlantic City and the tourism industry. From 1976 to 2008, the height of the casino industry in the resort, the value of the city’s property base grew by more than 6,750 percent, topping out at $20.5 billion in 2008.” (Huba, Par.3)

The legalization of gambling in New Jersey would have a drastic effect on the hotel industry which would be both positive and negative. Some perks with casino resort hotel;

“The Hotel/Gaming Industry is highly dependent on the business cycle and consumer discretionary spending. Indeed, operating earnings tend to swing widely between good economic times and bad. During a downturn, especially a severe one, volume measures (e.g., occupancy and RevPAR) quickly deteriorate. During difficult times, hotel managements, initially, are willing to sacrifice occupancy to maintain room rates. This is so because fixed costs need to be covered to protect net profit. “(Value Line, Par. 4).

Also, this caused a ripple effect due to job opportunities which was created for the locals. Gambling being legalized at a prestige location Atlantic City, NJ was a good choice for the hotel manager due to the tourist attraction and for the local business as well. Plan was for casino resort to continue bringing lucrative business and profit to help the city, county and State flourish. “With casino construction flourishing, it was clear that visitors were once again flocking to Atlantic city to gamble. But while gaming revenue soared, some studies suggested that legalized casino gambling did little to stop the increase in crime and poverty in Atlantic City. Tourism, however, was up drastically during that period.” (Revenue Rise. Par.6) To ensure this was the case state entities like the New Jersey Casino Control Commission (NJ CCC) required “A major component of the assurance is that all jobs affiliated with New Jersey’s gaming casinos must be filled by New Jersey residents.” (Michael, page. 6). Which this can also be view as a possible negative reason for this is due to hotel owner/managers cannot at free will outsource any portion of their business to maximize profitability. This would in turn later effect how some portion of their business is done in the hotel industry. Casino resort entire purpose in Atlantic City when gambling became legalized was to strictly bring profit to a state and city which at the time was dying economically due to competitor such as Disney world which had four theme park and also New York city also known as “Big apple” which drew visit around the world just to say they’ve been part of this great city. Legalizing gambling was one of the best thing New Jersey at the time did for the state to help the hotel industry. Below is a line bar that shows the revenue in casino hotels.

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