What Will Legalizing Weed in New Jersey Mean for NJ Casinos?

Legislation signed by New Jersey Gov. Philip D. Murphy on Monday, February 22, 2021 legalized (decriminalized) the recreational use of weed (marijuana) in New Jersey. This new law permits citizens 21+ to possess up to six ounces of weed. New Jersey is the 14th state to legalize recreational marijuana use.

While this is a huge decision with rippling effects across multiple industries and sectors, one question that’s being asked by many is what will legalizing weed in New Jersey mean for the NJ gambling industry?

Let’s take a quick look at how decriminalizing marijuana might impact Atlantic city casinos, online gambling, and more.

New Jersey Proves Progressive Again

New Jersey is one of five states with legal online casinos and one of 15 states with legal online sportsbooks, so naturally — they would be progressive enough to legalize recreational weed before many other states. New Jersey Governor Murphy has been pushing to legalize adult-use marijuana and lessen weed laws since 2016, and on Monday, he was finally able to push this agenda forward.

“Over the coming months, our new cannabis marketplace will begin to take shape,” Murphy said. “Businesses will be formed and jobs will be created. Starting immediately, those who had been subject to an arrest for petty marijuana possession — an arrest that may have kept them from a job or the opportunity to further their education — will be able to get relief and move forward. This is how we move forward.”

What Does Legalized Weed Mean for Atlantic City Casinos?

A big question about the legalization of weed in New Jersey is how it will affect gambling. Can we expect to see vapes and blunts at the roulette table? Will there be weed dispensaries at Golden Nugget or Caesars?

The short answer is probably. The long answer is not anytime soon.

The first step in the process was legalizing marijuana use, but there are many more steps to go before you’ll find weed at your favorite NJ casino. New Jersey officials are now working to build a sustainable infrastructure that will include regulatory bodies, licenses, and supporting legislation. Experts and Murphy himself suspect this process to take several months. However, once open — the weed industry is expected to bring in more than $126 million annually to New Jersey.

While legalizing marijuana is great for New Jersey residents and the economy as a whole, what does it mean for land-based New Jersey casinos? If past trends are indicative, these casinos and their hotels should see a massive uptick in guests. One study from Penn State found that hotels in Denver saw a $130 million increase in revenue following the legalization of recreational marijuana. As a whole, Denver hotels saw a 9% increase in occupancy rate through the first year following the legalization.

The Colorado Tourism Office (CTO) also found that 6.2% of tourists visited the state mainly because of legalized marijuana and that roughly 16% of all guests in 2018-2019 visited a dispensary while on their trip to the state. Legalizing weed in New Jersey will have a trickle-down effect on many tertiary industries, but none more so than hospitality. More tourists will choose to visit New Jersey in-part because of legalized marijuana, and many of these travelers will stay at or visit an Atlantic City casino during their trip. Over time, this should lead to higher revenues for these casinos.

The overarching expectation for Atlantic City casinos is that the legalization of weed will be a positive addition. However, we can use Las Vegas as a case study for how Atlantic City might ultimately look. Simply, weed dispensaries and Vegas casinos live in harmony on the strip but are not physically intertwined. Instead of buying weed by the cage within the casino, you’ll likely find legal dispensaries as a stand-alone facility near the casino. Some experts think we could see designated weed lounges within Atlantic City casinos one day, but we’re many years away from that.

What Does Legalized Weed Mean for NJ Online Casinos?

Legalized weed is going to bring more tourists and money to Atlantic City casinos. More revenue for New Jersey land-based casinos from an increase in tourism will have a positive effect on NJ online gambling which is correlated. All of the legal New Jersey online casinos are partnered with a land-based casino and some are the same brand (Caesars, Golden Nugget, Hard Rock, Resorts, Tropicana, etc.). As they generate more revenue through their land-based casinos, they will be able to pass additional value onto their other assets — like their online casinos.

New Jersey online casino users may see an uptick in promotions and bonuses as a result of the increased revenue to these casinos. They may also see better UX as these casinos continue to invest more money into improving the interface of their online and mobile casino assets. In other words, legalizing weed will have an indirect benefit on New Jersey online casinos through more promotions, bonuses, and jackpots and a better user experience through improved technology.

Weed and Gambling

Much like alcohol, weed does lead to impairment. Studies suggest that marijuana use can impair coordination, affect memory, decrease attention, and slow reaction time. This can have a negative effect on your ability and judgment while gambling in-person and online. While everyone responds differently and has unique tolerance thresholds, it’s important to be cognizant of yourself when and if you choose to gamble while under the influence of marijuana.

As with any legal or illegal substance, be careful.