New Jersey became the third and most populous U.S. state to launch Internet gaming when state regulators approved 13 websites run by six Atlantic City casino operators to go live to the public at midnight on Monday.
Casino revenues have dropped from more than $5 billion in 2006 to about $2.8 billion now, due mostly to competition from neighboring states.
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That has been bad news for the city, which collects less in taxes when casinos make less money. The city's coffers have also been strained as casinos have challenged—and won—big tax appeals, with the city having to borrow to pay them off.
"Although some market participants will benefit, New Jersey online gambling is not going to be the savior of the [Atlantic City] casino market," Fitch analysts in a note. "In some ways, it will be detrimental because it has kept brick and mortar supply in the market when the level of demand dictates that some supply should be removed."
(Read more: Why New York casinos could crush Atlantic City)