(Bloomberg) — As Governor Chris Christie seeks a lifeline for an Atlantic City weakened by a spate of casino closings, lawmakers are considering a move that could doom the oceanside resort.

Voters may be asked as soon as November 2015 to overturn an almost 40-year-old law that gave Atlantic City a monopoly on gambling in New Jersey. The restriction helped turn the tourist spot at the state’s southern end into the top U.S. East Coast gambling destination, until competition in neighboring states led to seven straight years of declining revenue.

With as many as five of Atlantic City’s 12 casinos closing this year, some lawmakers say allowing gambling in other towns is crucial to reclaim revenue that has gone to New York and Philadelphia. Senator Raymond Lesniak, an Elizabeth Democrat, says the move would help the ailing city because lawmakers can direct new money there. Fitch Ratings, for one, disagrees.

“A northern New Jersey casino would be more of a threat than an aid to Atlantic City, even if you have some kind of revenue-sharing component,” said analyst Alex Bumazhny in New York. “We view it as more of a risk than an opportunity for Atlantic City casinos.”

Christie, 52, a second-term Republican, is meeting behind closed doors today with political leaders and casino officials on strategies to build Atlantic City revenue on non-gambling attractions including entertainment and retail. The summit comes four years into his five-year plan to revitalize the city.

Rating Downgrade

That turnaround effort, which included more marketing, policing and tax breaks, hasn’t delivered, prompting Moody’s Investors Service to cut the city’s $245 million of general- obligation debt to junk in July.

Revel, the $2.6 billion hotel and casino meant to usher in a new era of opulence when it opened in 2012, ceased operations Sept. 2 after two bankruptcies and a 10-month search for a buyer. The Atlantic Club closed in January and Caesar’s Entertainment Corp.’s Showboat shut on Aug. 31.

A fourth, Trump Plaza, is set to close Sept. 16, and a fifth, Trump Taj Mahal, may shut in mid-November, according to people with knowledge of the situation. Robert Griffin, chief executive officer of Trump Entertainment Resorts Inc., which owns the two properties, declined to comment. Trump, who owns about 10 percent of the company’s stock, has no active management role.

Tax Comparisons

The growth of gambling in Pennsylvania, Delaware, Maryland and New York cut casino revenue in Atlantic City to $2.9 billion last year from a peak of $5.2 billion in 2006. The drop means less money for New Jersey, which collects an 8 percent tax from casinos and dedicates the money — $205 million last year — to programs for senior citizens and the disabled.

Fitch, in an Aug. 29 credit market commentary, estimated a drop to $2.5 billion in 2015, then “closer to $2 billion as new competition opens in neighboring states and, possibly, northern New Jersey,” said Bumazhny, the rating company’s director of gaming, lodging and leisure.

Bumazhny, in a Sept. 5 telephone interview, said a North Jersey location would attract “pretty good competition for gaming licenses” because of population density, proximity to New York City and the state’s comparatively low casino levy. Pennsylvania taxes slots at 55 percent; four casinos to open in New York will pay a range of 10 percent to 45 percent tax on slots and table games.

Voters Wary

New Jersey, the first Northeastern state to legalize gambling, did so in 1976 with a referendum that limited it to one location to revive the decaying resort. It grew to become the second-largest U.S. gambling market after Las Vegas, and lost that spot to Pennsylvania in 2012.

Expansion of casinos beyond Atlantic City faces another hurdle in New Jersey voters, who rejected widespread gambling in a 1974 ballot question and who remain opposed, 50 percent to 42 percent, to allowing it in other towns, according to an Aug. 4 poll by Fairleigh Dickinson University’s PublicMind.

Still, Senate President Steve Sweeney, from the Philadelphia suburb of West Deptford, says an Atlantic City breakout is inevitable.

“We used to collect a half-billion dollars in tax from them — now it’s down to about $200 million,” Sweeney, the state’s highest-ranking elected Democrat, said Sept. 4. “We need to find a way to bring that back up.”

Meadowlands Proposal

Constitutional amendments like the one Lesniak is proposing don’t need the governor’s approval. The lawmaker, whose party controls the legislature, said he is confident voters will support the measure if it limits new casinos and spells out how the money would help Atlantic City. He expects the most opposition from New York and Pennsylvania, as well as the gambling industry.

“To let that money leave the state, and those jobs go elsewhere, is not the solution,” Lesniak, of Elizabeth, said by telephone on Sept. 4. “The only hope for Atlantic City is a North Jersey casino.”

North Jersey lawmakers have long pushed to allow gambling terminals at the Meadowlands horse racetrack in East Rutherford. Their efforts were stymied after casinos lobbied against it.

Kevin Ortzman, president of the Casino Association of New Jersey, which represents six properties, didn’t return a phone call for comment placed Sept. 5 to his office at Bally’s Atlantic City, where he is senior vice president, general manager and chief executive officer. He holds the same titles for Caesars Atlantic City.

Heading North

In recent months, Fireman Capital Partners Chairman Paul Fireman has been discussing building a casino in Jersey City, Lesniak said. The plan calls for a $4.2 billion, 95-story casino, hotel and motor-sports stadium on Fireman’s golf course along the Hudson River. Fireman, whose private-equity firm is based in Boston, didn’t respond to a voicemail message for comment on the plan Sept. 5.

“Increased competition is only going to hurt Atlantic City more, and casinos just aren’t the revenue source for the state that they were 10 or 15 years ago,” said Dan Cassino, a Fairleigh political-science professor and poll analyst.

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