The state Senate approved a bill that would allow for casinos with as few as 200 hotel rooms to be built on the city's boardwalk.
That's down from the current 500-room minimum, and one-tenth the 2,000-room inventory that Atlantic City's most successful casinos have.
Sen. Jim Whelan, a former Atlantic City mayor, proposed the change to lower the financial barrier to building. The Seminole Indians, through their Hard Rock chain, have already said they would build such a casino in Atlantic City if the law were changed.
The smaller casinos would pay higher taxes.
The measure now goes to the state Assembly.