Tim Burgess

A group of Assembly members wants to study the possibility of
bringing casino gambling to the Meadowlands in Bergen County.

They have sponsored a resolution to create a Casino Gaming Study
Commission. The thin justification for such action is to study the
impact of last years gaming reforms, which streamlined regulation
of casinos and created Atlantic Citys Tourism District.

But the real reason behind the move is to make yet another push
for casinos in North Jersey.

Assemblyman Ralph R. Caputo, D-Essex, who is the chief sponsor
of the resolution, has previously sponsored an unsuccessful attempt
to amend the state constitution to allow Bergen County casinos.

Caputo said Meadowlands casinos would draw North Jersey
customers who are now going to casinos in Pennsylvania or New York,
rather than Atlantic City. And, of course, sponsors think casino
gaming would bring gamblers to horse races in the Meadowlands.

It sounds like the same argument New Jersey has been hearing -
and rejecting – for years. Nothing seems to have the staying power
of a truly bad idea.

And make no mistake, expanding casinos to other parts of New
Jersey is a terrible idea, because it would undercut the industry
that is such a powerful economic engine for the state.

Atlantic City is a destination nearby states cannot match. The
beach, the Boardwalk, the Convention Center – and the nearby resort
towns – are a backdrop for a concentration of gaming, dining and
entertainment properties that, even in an economic slump, continue
to provide hundreds of millions of dollars in tax revenue to
Trenton every year.

New Jersey has just gotten serious about supporting that
industry with a coordinated marketing plan and special attention
from the state.

Gov. Chris Christie has made a commitment to Atlantic City and
has said he wants to keep casino gaming exclusively in the city for
the next five years. Theres not much chance he would sign this
legislation, even if it were to be approved by the Assembly and
Senate.

But whenever this idea of expanding gambling resurfaces,
lawmakers should put their collective foot down – on it – and make
sure nothing interferes with the revival of Atlantic Citys gaming
industry.

TALLAHASSEE – Coming on the heels of Gov. Rick Scott saying he’d like to see so-called “Internet cafes” outlawed, a Senate committee passed a bill 8-1 Thursday that would regulate, but not ban, the gaming centers.

State Sen. John Thrasher, R-St. Augustine, was the only vote against the regulation bill. He called it a “major expansion of
gambling.”

The committee considered a bill that would ban the centers but its sponsor, Sen. Steve Oelrich, R-Gainesville, pulled it from consideration when it became clear he did not have support.

The regulation bill would require all sweepstakes centers to register with the state, give proof that they are legal to operate and require they pay a $100-per-machine fee to the state each year.

The vote signals a clear separation between the Senate and the House, which already has passed a bill outlawing the cafes.

The sponsor, Miami Republican Miguel Diaz de la Portilla, says the fee could raise $4 million annually. He also argued the sweepstakes industry employs up to 13,000 people in Florida.

There are about 50 sweepstakes centers in Northeast Florida, most of them in Duval and Clay counties. Jacksonville was the first city in the state to regulate them, passing a bill in late 2010 that imposed fees and allowed no new centers to open.

One exchange during Thursday’s debate came between Thrasher and a Jacksonville attorney who represents a company that provides software to centers.

Laurie Lee, a lobbyist with International Internet Technologies, refuted an earlier speaker who said that all of law enforcement supports a ban. She pointed to letters from Jacksonville Sheriff John Rutherford and St. Johns County Sheriff David Shoar in support of regulation.

“Our community reached a successful compromise through aggressive regulation of this business, in lieu of prohibition,” reads his letter.

Thrasher, who represents parts of both counties, said just because they support regulation does not mean they also don’t support doing away with the centers.

“As far as I am concerned, I have not heard from either of those sheriffs that they oppose prohibition,” he said.

Before the Duval regulation bill passed, Rutherford said he would ban them if he had his way but felt there was enough gray area to keep them open.

Charities that receive donations from the centers and Veterans of Foreign Wars spoke in favor of regulation. Religious groups, the Florida Sheriff’s Association, and Attorney General Pam Bondi’s office lined up in favor of a ban.

Although Scott told reporters Wednesday that he thought sweepstakes centers were “illegal,” Diaz de la Portilla said things can change.

“The governor has changed his mind on a couple of things,” he said, “like pill mills, for example.”

matt.dixon@jacksonville.com, (904) 716-8789

Although the economic outlook remains uncertain, the gambling industry has come roaring back in months past. This is largely due to more hope over the health of the US economy and continued growth in disposable income in many key emerging markets around the globe. Beyond these factors, some of the key gambling cities in the world have seen continued growth as well, suggesting that the worst may be over for the industry.

In fact, despite the broad concerns over the health of the Chinese market, Macao, the only city in the country where gambling is legal, has seen gambling revenues continue to surge to end 2011. Revenues rose 42% to a record of $33.48 billion ensuring that the city continues to be a Mecca for the global gaming industry. Additionally, the upstart of Singapore is expected to see double digit revenue growth as well, further cementing its spot as the second biggest gaming market on Earth despite only having two casinos which have been in operation for less than two years. Yet even for those looking closer to home, in the traditional hotspot of Nevada, news has been pretty good as well. Gambling revenue increased by 7% in November, suggesting that the growth isnt limited to Asia alone (read Three Outperforming Active ETFs).

Even if the economy doesnt pick up, however, casinos could see growth from the opening up of a variety of new markets which could provide casinos with fresh consumers for their resorts. State and national governments are becoming increasingly desperate for new revenues to plug budget holes and allowing the construction of casinos is a pretty easy way to boost collections. Often times, governments dont have to spend anything they merely have to sanction the casinos, and given the broad aversion to spending cuts or tax increases this could be the way to go in the future (read Does Your Portfolio Need A Hedge Fund ETF?).

Already plans are in the works for multibillion dollar casino complexes in states such as Florida and New York, while smaller projects could be given the green light in states such as Ohio, Massachusetts, and a variety of others as well. The plans stretch beyond the US too, as there are reports of new casinos in a number of Asian markets including South Korea, Japan, and a few smaller, less developed nations as well, suggesting that the coming years could see high rates of expansion for the gaming industry, even if just a fraction of these proposals go through the legislative process.

GamingETF In Focus

Given these trends, some investors may want to consider making a bet on the continued resurgence of the sector in 2012 and beyond. For these investors, there is one ETF available that is a good proxy for the global industry; the Market Vectors Gaming ETF (BJK). This fund looks to track the S-Network Global Gaming Index, which is a ruled-based, modified cap-weighted, float-adjusted benchmark designed to give broad access to the global gambling industry. Currently, the fund charges investors 65 basis points a year in fees and holds 53 securities in total (read Top Three Consumer Staples ETFs).

In terms of country exposure, American firms dominate making up nearly 36.4% of total assets, by far the most for a single nation. Beyond the US, however, two Asian markets take the next spots with China (18.3%) and Malaysia (9.8%) rounding out the top three. Overall the exposure is pretty well spread out among countries and regions as Australia, the UK, Japan, and South Korea round out the top seven destinations. For individual securities, the most assets go towards Las Vegas Sands (LVS) with 15.3% of the total while Wynn Resorts (WYNN) and Genting comprise the rest of the top three, making up 7% and 6.4% of total assets, respectively.

While the winds may be ad the industrys back, investors should note that the sector is by no means without risks. Many casinos continue to struggle under heavy debt loads thanks to a pre-recession building boom and some have not yet recovered. Additionally, BJK has a beta of 1.3 suggesting that the fund can be far more volatile than the overall market. In fact, the funds best three month period saw a 50% gain while the worst three month period experienced losses of nearly 45%, showing just how quickly stocks in this sector can move (see ETFs vs. ETNs: Whats The Difference?).

Nevertheless, for investors who are encouraged by the plethora of casinos that could be opening up soon as well as strong revenue numbers from some of the top gaming destinations of the world, this could be an intriguing time to buy. The P/E of the fund is just 12.5 while the Price to Sales is 1.8, suggesting there could be some decent values in many of the securities in the fund. Add in a solid yield of over 2% and some risk-tolerant investors could hit the jackpot with this Van Eck ETF (read A Primer On ETF Investing).

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Author is long LVS.