Time to read [9 minutes]
Takeways
- Casino development frequently promises job creation and tax revenue, but research shows that proximity to casinos tends to depress local property values and rents
- The expansion of gambling, including online betting, has changed industry dynamics; failed luxury projects like Atlantic City’s Revel highlight competitive pressures
- Personal experience and market analysis suggest that casinos rarely deliver enduring community benefits, often leaving behind economic and social issues after developers exit.
I grew up in the Maryland suburbs of DC, and our next-door neighbor was the president of Gamblers Anonymous, so there were lots of conversations on the topic at home. As a result, I’m not a fan of gambling, although I somehow won my first and only blackjack tournament with a bunch of my quickly annoyed friends who were options traders (essentially professional gamblers). As an adult, I’ve always been wary of the introduction of casinos into a community – gambling represents a moral component and an exaggerated tax revenue component to be considered. As a reminder, developers are in the business of building anything that makes economic sense. They always need to lay tracks in front of the train to sustain business momentum, keep their talent, and cover their overhead (and keep an adequate supply of Tums). Last week, the huge bid from SL Green, Caesars, and Roc Nation (led by Jay-Z) for a $5.4 billion Times Square casino in Manhattan was rejected by the Community Advisory Committee. There are numerous social media clips of Marc Holliday, CEO of SL Green Realty, chastising the committee’s decision with language like, “What you did here today was despicable…” Oof. About a decade ago, I was teaching an appraisal class in Atlantic City (AC), New Jersey. After my presentation, the next speaker was the former Mayor of AC, who discussed the future of gambling, which was not particularly promising. Municipalities have found it easy to sell the concept of casinos because it is usually pitched as a quick way to generate tax revenue and jobs. While new casinos do create jobs, the question is whether they continue to generate substantial tax revenue. After the federal 1988 Indian Gaming Regulatory Act was passed, there was a state-level push across the US to expand gambling, and wow, did it ever expand. As a result, new casinos don’t provide the same potential regional economic boost as they once did. In fact, the former AC mayor told us that building new casinos does not attract many new gamblers from outside the immediate area, and it dilutes the existing pool of gamblers.
Revel In The Losses
The name of the last attempt to open a new casino in AC was Revel Hotel and Casino, built for $2.4 billion as an attempt to cater to an ultra-luxury market in a middle-class demographic. In contrast, Las Vegas is currently experiencing an upward wealth skew among gamblers. Visits are down, but gambling revenue is up, which parallels the new construction market in housing, as it tends to skew towards luxury. The Revel ended in two bankruptcy filings during its two years of operations, losing its investors more than $2 billion. I wonder what the underwriting process looks like for such a quick and expensive failure. As the often misquoted saying goes, “a billion here and a billion there, sooner or later its real money.” Competitive pressure from nearby states, including New York, Pennsylvania, and Delaware, was named as a key reason for its failure.
Forty years ago, casinos were located in Las Vegas and Atlantic City. However, the number of casinos nationwide has increased significantly since the 1988 Indian Gaming Regulatory Act was enacted, as indicated by this recent effort to count them.
In the late 1980s, when the Indian Gaming Regulatory Act was passed, Las Vegas had approximately 65 casinos, while Atlantic City had around 6. Today, Atlantic City has nine, and Las Vegas still has about 65. What has changed is the number of casinos that exist outside of Las Vegas and Atlantic City. With legalized casinos pushed by states in search of quick fixes for state budgets, there are roughly 2,000 casinos, excluding Las Vegas and Atlantic City.
Do New Casinos Help Local Housing Markets?
In this polarized world of gambling versus non-gambling, I’m not clear whether the authors of the following studies have some built-in bias due to who they were hired by. As readers of Housing Notes well know, the lack of understanding of a source can render the results invalid. According to a surprising 2013 NAR Research piece, “Casinos and their impact on home values”, they help depress property values close to the casino. NAR analyzed Springfield, Massachusetts, and homes in proximity tended to be hurt by the introduction of a casino. Another study in Canada shows the impact in terms of lower rent and housing prices for nearby properties.
The above and other research I read suggested that the home value damage occurred in proximity but dissipated fairly quickly with distance. That is a reasonable conclusion.
What Is The Relationship Between Online Gambling And Casinos?
When watching NFL games on the weekend, every other commercial is about sports betting, such as DraftKings or MGM. While online gambling is closely aligned with casinos, some studies show it is more addictive and has cut down foot traffic. Las Vegas casinos have links with online sports betting entities, and this hybrid model is likely the future.
Online gambling is only about one-third of the revenue generated by casinos in the US.
Final Thoughts
I am slightly off on this topic as a subject for Housing Notes, but the news of the failure of the massive Times Square casino proposal was big news, and it involves developers. I’ve long had a lot of concerns about our continued shift to a gambling culture. My handful of visits to Atlantic City during its gambling heyday showed a decrepit landscape. The city, just a block away from the casinos, was stark and run-down, as if no apparent tax revenues were being invested in the local market, despite the creation of more jobs.
Developers are in the business of building things that make economic sense for them. However, I worry about what such a new casino venture would have looked like down the road when the developer was no longer involved. If the picture is anything like my experiences at real estate conferences in other parts of the country, such as New Orleans, Las Vegas, Connecticut, and Atlantic City, it won’t be good.
On the topic of gambling, I tend to play it safe. My wife buys a lottery ticket every so often, and I continually pontificate about how that is “cheating at life” and even how married women who win are more likely to ditch their husbands. To be safe, I always remind her that I get “half” if she wins.
The Actual Final Thought – A few weeks ago, I watched an old movie for the zillionth time, and seeing where the sounds came from on this clip made me happy. I also have the soundtrack on my iPhone (I know, I know).
Recent Presentations
The Core Truth Podcast w/ Peter Hernandez
This morning I did a interview with Peter Hernandez on his The Core Truth podcast this morning and I thought you’d be interested. The episode “Jonathan Miller on Compass Acquiring Anywhere” was a good discussion about my post on Housing Notes and beyond: Compass Paid Double Nickels On The Dime For Anywhere. Peter is so good at getting the heart of any matter.
Boroughs & Burbs Podcast
I had a terrific conversation with Roberto and John last week on the state of housing. They asked good questions and I tried to convey my answers with as much clarity as I could in a market that is really confusing for consumers. And from the listener count on their Youtube channel, the conversation seemed to resonate with their audience. Click on the link above or the image below to replay the broadcast.
Upcoming Presentations
• September 29 / In-Person ========================================
HGAR’s IMPACT: The Member Experience
I’m excited to speak at IMPACT: The HGAR Member Experience on September 29. I’ll be joining real estate professionals from across the region to explore what’s next in the housing market, economic opportunities and building community. Join me and be part of the conversation that’s shaping what’s next. Learn more and register.
Did you miss the previous Housing Notes?
Housing Notes Reads
- Real estate brokerage Compass to buy rival Anywhere in $4.2 billion deal [Reuters]
- Real estate brokerage Compass to buy rival Anywhere in $4.2 billion deal [NBC]
- Brokerage Giant Compass Agrees to Acquire Rival Anywhere for $1.6 Billion [Wall Street Journal]
- Compass to acquire Anywhere, creating world’s largest brokerage [Real Estate News]
- Compass Announces Combination with Anywhere Real Estate in All-Stock Transaction [Compass Investors]
- Compass Plans to Merge With Anywhere to Form $10 Billion Company [Bloomberg]
- Compass to acquire Anywhere for $1.6B [The Real Deal]
- Casinos and Regional Economies: Has the Game Changed? [Richmond Fed]
- State Revenues from Gambling: Short-Term Relief, Long-Term Disappointment | Rockefeller Institute of Government [Rockefeller Institute]
- Caesars’ Times Square Casino Bid Ends After NYC Community Vote [Bloomberg]
Market Reports
- Elliman Report: Manhattan, Brooklyn & Queens Rentals 8-2025 [Miller Samuel]
- Elliman Report: Florida New Signed Contracts 8-2025 [Miller Samuel]
- Elliman Report: New York New Signed Contracts 8-2025 [Miller Samuel]
