Atlantic City’s losing streak

Atlantic City’s losing streak, as more states compete for gambling revenue and jobs

By J. Freedom du Lac
Published: August 19


ATLANTIC CITY — The billboard hard by the Atlantic City Expressway is supposed to speak for a single casino, not an entire company town. But Revel Casino Resort’s marketing slogan resonates loudly throughout this struggling seaside resort.

“Gamblers Wanted,” it says. And how.

Atlantic City, the erstwhile East Coast gambling mecca, is on an epic losing streak; over the past six years, competitive and economic forces have crushed the local casino economy, driving revenue down more than 40 percent.

Once, the city that inspired the board game Monopoly had its own gambling monopoly on this side of the country. Now, it’s more Marvin Gardens than Boardwalk, with states from Maryland to Maine lining up to join the high-stakes game for tax revenue and middle-class jobs.

In 2006, when gambling in Atlantic City reached record levels, there were 27 commercial and tribal casinos, slots parlors and racetrack casinos in the Mid-Atlantic and Northeast, according to the University of Massachusetts at Dartmouth’s Center for Policy Analysis. Now, there are 55 — with more casinos coming in Maryland, Pennsylvania and Massachusetts.

Pennsylvania, which first allowed casino gambling in 2006, surpassed New Jersey last year as the second-largest U.S. gambling market (after Nevada), with players choosing convenience (a single casino close to home) over critical mass (there are a dozen casinos in Atlantic City, that state’s only gambling locale).

In Maryland, which has embarked on its own massive gambling expansion, casino revenue tripled in the latest fiscal year. Thirteen months after opening, Maryland Live Casino — which has hired dozens of dealers and gaming supervisors away from Atlantic City — rivals the ocean resort’s biggest player, Borgata Hotel Casino and Spa. In July, Maryland’s largest casino collected $52.4 million from its slot machines and table games, compared with $64.2 million at Borgata.

This month, the Arundel Mills casino will open a 52-table poker room that analysts say is likely to pull even more business out of Atlantic City. As if to punctuate the shifting fortunes, poker at Maryland Live will launch Aug. 28 just as the opulent if oft-empty poker room closes at Revel, a $2.4 billion beachfront property that filed for bankruptcy less than a year after it opened.

There are still profits being made around Atlantic City, where the first casino opened on the historic boardwalk 3¹/₂ decades ago. But the barrier-island town has been losing its lifeblood business at a breathtaking clip. In 2006, gross gambling revenue here was a record $5.2 billion. The total has gone down every year since; in 2012, the number was barely over $3 billion — the lowest mark since 1991.

“The situation there has become catastrophic,” said Steve Norton, a gambling analyst with a long history in Atlantic City, where he opened the first casino, Resorts International, in 1978. (His son, Robert Norton, runs Maryland Live.)

And the outlook isn’t any better this year, even as surveys suggest Atlantic City’s image is improving: In the first half of 2013, gambling revenue was off by nearly 11 percent.

Officials tout increased luxury-tax and occupancy-tax revenue, which indicate increased spending on non-gambling activities and attractions and on lodging in roughly 20,000 rooms. But Atlantic City is a gambling-dependent city with a gambling-based economy that is shrinking rapidly.

“It’s dismal,” said David G. Schwartz, director of the Center for Gaming Research at the University of Nevada at Las Vegas. “They have serious issues.”

And more threats loom. In November, New Yorkers will vote on a major casino-expansion measure.

Rebranding a gambling city

One recent morning, in the shadow of the Trump Taj Mahal, men and women in suits went about the work of saving Atlantic City.

“What we need to do is try to rebrand and reimagine Atlantic City as a national destination,” said John Palmieri, who was appointed by New Jersey Gov. Chris Christie (R) to run the Casino Reinvestment Development Authority.

Christie has called the city’s revitalization “a key priority” of his administration. His photo is displayed in the lobby of the converted firehouse, where state employees have been tasked with turning his bet into a winner.

Legal sports books at casinos and horse tracks around the state could help. New Jersey voters approved a sports-betting measure in 2011, but it was blocked by a federal judge. The state has appealed.

Palmieri’s agency is not directly responsible for improving gambling revenue. Instead it focuses on making Atlantic City a more attractive place to visit and on trying to gin up more convention and meeting business. (Atlantic City has just a tiny fraction of the $16 billion meetings market in the Northeast, according to the reinvestment authority.)

“We need market,” said Tom Ballance, the president and chief operating officer of Borgata, where revenue has declined at a more modest rate than most other Atlantic City properties.

More than 27 million people visited Atlantic City last year, according to South Jersey Transportation Authority estimates. But blight and crime have been scaring visitors away, Palmieri said. So the reinvestment authority, which takes a cut of gambling revenue from the casinos to fund its efforts, has been trying to clean up the city by knocking down eyesores, opening neighborhood parks, adding art installations and new landscaping and underwriting commercial and residential projects.

“We need to make it more inviting and give people a sense of comfort,” Palmieri said. “We are trying to make a statement to people who haven’t visited Atlantic City for years because they think it isn’t safe.”

Reality hasn’t fully cooperated: Shortly before Memorial Day last year, two Canadian tourists — an 80-year-old woman and her daughter — were stabbed to death in broad daylight near Bally’s Casino.
Wander too far from the casinos now, and you’ll quickly be reminded that it’s been years since Atlantic City was a prosperous place. Revel, an eye-popping glass high-rise that screams Las Vegas luxe, is close to a run-down housing project. There’s a soup kitchen next to the reinvestment authority’s parking lot and a methadone clinic nearby. Pawn shops are everywhere.

Nearly a third of the 40,000 residents here live below the federal poverty line, and the homeless problem is serious enough that the reinvestment authority runs daily sweeps beneath the boardwalk to flush out guests from “the Underwood Hotel,” as some locals call it.

Cashing in on the beach

Still, there are signs of improvement all over Atlantic City, most significantly on the boardwalk, which has been cleaned up — and opened up by the casinos, some of which once limited physical and visual access to the waterfront in an effort to keep customers inside.

At Resorts, where ocean-facing windows were once covered with brick, the new Jimmy Buffett’s Margaritaville restaurant spills onto the boardwalk, across from the Landshark bar, where a song by Kenny Chesney was blaring on a recent afternoon.

Hundreds of people were on the beach near the bar.

“You never used to see that,” said Don Guardian, director of the reinvestment authority’s special improvement division. “People went for the casino, not for the resort.”

The changes will be showcased in September when the Miss America pageant returns to its birthplace for the first time since moving to Las Vegas in 2006. Earlier this month, in anticipation of the pageant’s homecoming, a crew was replacing the sidewalks around Boardwalk Hall, which was glistening after a power wash.

Miss America was a marketing gambit itself, cooked up to sell the idea of Atlantic City as a year-round resort (or at least one that didn’t shut down after Labor Day). With the pageant’s return, that message can be reamplified along with another, more urgent one: Atlantic City is back, with more to do than ever. (In reality, Atlantic City never went anywhere — not even after Hurricane Sandy, which blew through without much incident.)

There are more nightclubs, more restaurants, more concerts, more burlesque shows, more shopping, more outdoor activities, more walkable spaces, more stuff, including beach volleyball courts and a high-tech light show that’s beamed onto the backside of Boardwalk Hall every night.

“We’re trying to change the old perception that there’s not enough to do here,” said Liza Cartmell, president of the Atlantic City Alliance, a casino-funded nonprofit organization that’s responsible for the city’s marketing. A “Do AC” campaign is being pushed aggressively up and down the East Coast.

In Baltimore, an important secondary feeder market, the Atlantic City Alliance is spending nearly $2 million on advertising in 2013.

According to the most recent internal research, positive perceptions of Atlantic City are on the rise.

“We’re making progress,” Cartmell said. But her bosses — the eight casino executives on the Atlantic City Alliance board — probably won’t be applauding her at a meeting anytime soon. Gamblers still wanted, she said.

“They won’t be happy until they see their gaming revenues go up.”


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