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Doubling Down on New Jersey Online Gambling

Stocks in this article: BYD LVS CZR MGM WYNN

The "Amtrak corridor" from Washington D.C. to Boston is the most urbanized region of the country. About 50 million people live there; almost one-fifth of the population of the country on just 2% of the land. For the bulk of that group, between New York City and the nation's capital, Atlantic City is a two hour drive or less.

Most of the visitors to Atlantic City day-trip to gamble. They are obviously attracted in particular by the casinos and other features of Atlantic City, given that there are plenty of other gambling options in the region. Of the six forms of legalized gambling (charitable, pari-mutuel, lotteries, commercial, Indian, racetrack), Pennsylvania, Delaware, Maryland and New York all have at least five. What does Atlantic City have to offer that the others do not? Options. Hit a casino, stroll on the boardwalk, or eat at a restaurant.

Online gambling cannot replicate those attractions, but it certainly can add to the whole experience.

There is a basic economic principle that economic activity begets more economic activity both directly and indirectly related. Ergo, more gambling in one form will lead to more gambling of other varieties. For example, imagine a small-town accountant wins the poker tournament at the local charitable event in Pennsylvania. There is a reasonable chance that the accountant might press their luck next at the casinos in Atlantic City. Once in Atlantic City, they might also decide to spin the roulette wheel or try another form of gambling.

It should be the same with online gambling.

Investors are betting that online gambling will lead more people to the casinos at Atlantic City. While there, they might choose to gamble online from their room, or while walking on the boardwalk. No matter where the bet is being placed, from the gaming table, the television in the room of the guest at the resort, or from a smartphone while strolling on the boardwalk, the revenue will accrue in bottom line of the casino operator.

At the time of publication, Yates held no positions in the stocks mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

Jonathan Yates is a financial writer who has had thousands of articles appear in periodicals and Web sites such as TheStreet, Newsweek, The Washington Post and many others. Much of his career was spent working on Capitol Hill for Members of Congress in both the House and Senate, on both committee and personal staff. He was also General Counsel for a publicly traded corporation. He has degrees from Harvard University, Georgetown University Law Center and The Johns Hopkins University.
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