For decades after it began offering legal gambling in 1978, Atlantic City had the East Coast market pretty much to itself. And its failure to realize that situation would one day end nearly put it out of business once competition showed up.
Now, two of the fastest-growing areas of New Jersey's gambling market — internet gambling and sports betting — will soon get some competition next door from Pennsylvania.
But this time, at least some Atlantic City casinos and their parent companies are hedging their bets by competing in both states.
MGM, which owns Atlantic City's Borgata, and the Golden Nugget are among companies seeking internet gambling licenses in Pennsylvania once it begins there sometime next year. They were the applicants for Pennsylvania's remaining online licenses this week, seeking five of the 11 still available there.
A Pennsylvania casino, SugarHouse, already competes online in New Jersey through a licensing affiliation with the Golden Nugget.
And Pennsylvania gambling regulators recently gave a sports betting license to Harrah's Philadelphia, owned by Caesars Entertainment, which operates three Atlantic City casinos as well.
David Schwartz, director of the University of Las Vegas Nevada's Center for Gaming Research, said gambling companies are smart to operate on both sides of the border.
"Regional diversification is a sound strategy, particularly in the online arena," he said. "In this market, convenience is a major factor, so the ability to gamble at home rather than traveling across state lines is a major factor. In that case, licensure in multiple jurisdictions makes a great deal of sense."
That is particularly true for internet and sports betting, which in New Jersey are restricted to those physically present within the state. The same restrictions will apply to Pennsylvania.
The Golden Nugget says it wants to compete in Pennsylvania despite its 54 percent tax rate on internet slots and 16 percent for table games. Thom Winter, senior vice president and general manager of online gambling for the Golden Nugget called the Keystone State "a natural next step for us."
"We take a long-term approach to online gaming and believe that we can replicate our New Jersey success in other jurisdictions," he said.
Internet gambling and sports betting are the two bright spots in what until fairly recently had been a dismal Atlantic City gambling market. Due in large part to competition from Pennsylvania casinos, five Atlantic City casinos shut down between 2014 and 2016; two have since reopened as the Hard Rock and the Ocean Resort.
Online gambling, which began in New Jersey in Nov. 2013, and sports betting, which started in June of this year, have provided new revenue streams to help the casinos recover from their previous struggles.
Over the first nine months of this year, internet gambling has brought in nearly $216 million, an increase of 17.6 percent over the same period last year. And each month, online gambling increases at a double-digit pace from a year earlier.
Sports betting is also taking off in New Jersey; since it began in mid-June, over $336 million worth of bets has been placed. Pennsylvania is taking notice; the state has approved sports betting licenses for five casinos thus far: Parx, Harrah's, SugarHouse, Rivers and Hollywood. Parx also received approval for sports betting at the Philadelphia Turf Club, their off-track betting facility.
Pennsylvania's first sports bets could be taken within the next few weeks.