What's troubling about this trend is that it shows no sign of slowing as even more casinos are built in the Northeast.
The growth in Northeast gaming
While Atlantic City floundered, the rest of the Northeast has experienced a gaming boom. Pennsylvania had almost no gaming market in 2006 and by 2012 it was raking in $3.2 billion a year in gaming revenue. LasVegas Sands (NYSE: LVS) was one of the visionaries there, building a casino where an old steel mill once stood in Bethlehem.
Connecticut's Foxwoods and Mohegan Sun generated a combined $1.9 billion in 2014, although it's down from a peak of $3.2 billion in revenue during 2006 due to increased competition.
Today, MGM Resorts and Wynn Resorts are building new resorts in the Massachusetts cities of Springfield and Everett (just outside of Boston), respectively. MGM Resorts is planning to spend $950 million on its resort while Wynn is investing a whopping $1.7 billion to enter the Boston market. But understanding why they're building just a few hundred miles from where Atlantic City is dying tells us a lot about regional gaming itself.
Regional gaming is all about convenience and appeal
What the Northeast is proving is that it's a regional gaming market, not a national draw like Las Vegas is. When Atlantic City was the only gaming with a major casino presence, it drew from millions of people only a few hours' drive away. But now there are shorter drives to newer casinos and Atlantic City has lost its place in the market. And since the only reason Atlantic City allowed gaming in the first place is because it was a city with a struggling economy, it's really just losing an short-lived economic boost from gaming.
For new casinos like Sands Bethlehem, MGM Springfield, or Wynn Everett, their success will come down to cost and local draw. Out of those three, I think Wynn's resort across the river from downtown Boston has the best chance for long-term success. But with a $1.7 billion price tag, it's also by far the most expensive. At least Wynn doesn't have to worry about competition with closer proximity to the population center. It has a monopoly on Boston for the time being, something Atlantic City lost when surrounding states started building more convenient casinos.
Unless you're the only game in town or an entertainment hub, like Las Vegas, gaming can be a risky business -- something Atlantic City is finding out the hard way.
The next billion-dollar iSecret
The world's biggest tech company forgot to show you something at its recent event, but a few Wall Street analysts and the Fool didn't miss a beat: There's a small company that's powering their brand-new gadgets and the coming revolution in technology. And we think its stock price has nearly unlimited room to run for early in-the-know investors! To be one of them, just click here .
The article Why Is Atlantic City Dying During the Northeast Gaming Boom? originally appeared on Fool.com.
Travis Hoium owns shares of Wynn Resorts, Limited. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .
Copyright © 1995 - 2015 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy .
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.