Can Atlantic City Live without Casinos?

The decline of Atlantic City’s casino industry seems unstoppable. Does the city have enough going for it to pick back up?  

The small coastal town of Atlantic City lies in southern New Jersey only 2-3 hours drive from New York. For decades it was a popular vacation spot for residents of the Big Apple as well as other eastern cities like Philadelphia, Washington D.C., and Baltimore.

• With high unemployment and falling home prices, Atlantic City is looking for new sources of tourism
• Non-gambling revenue grew by $162 million from 2012 to 2014, but gambling revenue fell by $2.4 billion over the same period
• Mayor Don Guardian: “It’s time to open another chapter”

Hailing itself “the world’s playground,” families and partygoers alike would flock to the city to enjoy the surf and sand as well as restaurants, amusement parks and music venues. Atlantic City was America’s entertainment capital long before Las Vegas hit the big time.

But eventually things started going downhill. During the 1920s it became a hotbed for illegal alcohol and prostitution, as well as a haven for prohibition-era gangsters connected to corrupt treasurer Nucky Johnson—Johnson was the inspiration for “Nucky Thompson,” the lead character in HBO’s Boardwalk Empire). Families eventually found Atlantic City to be an unwholesome destination.

Technological advancement also contributed to the decline. Affordable air travel during the post-war period meant that more east coasters could spend their vacations in sunnier locales like Florida and the Bahamas. Atlantic City remained popular only with the low-income demographic.

The rise and fall of casino gambling in Atlantic City

By the 1970s the city fathers had determined that something drastic needed to be done to right the flailing ship. They successfully lobbied for a referendum to pass in 1976 which legalized casino gambling within the city limits. While American gambling laws allowed each state to self-regulate, New Jersey and Nevada were the only states with legal casino gambling.

 On May 26, 1978 Resorts Atlantic City opened to a packed crowd. The next year Caesar’s Atlantic City and Bally’s Atlantic City opened, and America’s second gambling city was born. At its height there were 12 casinos in operation.

The industry quickly took off, with revenue topping $1 billion only three years after the first casinos launched. During the late 1980s Atlantic City was the site of many of Mike Tyson’s most high-profile fights and the preferred destination of celebrity gamblers like Michael Jordan.

Citywide casino revenue peaked at $5.2 billion in 2006, but has been caught in a downward spiral since then. With competition from neighboring states like Connecticut and Pennsylvania, masses of people simply aren’t coming out to the boardwalk anymore.

In 2013 revenue fell to $2.8 and casino employment stood at only 30,677, a decrease of more than 30% from 2006. The Showboat and Atlantic Club both closed their doors during early 2014, while the Revel filed for bankruptcy protection only two years after opening. The Trump Taj Mahal is also embroiled in messy bankruptcy proceedings.

Several local casinos, including the Borgata and MGM, have attempted to use technology to reverse their fortunes: they’ve launched the first online casinos in America. Results have been mixed, however.

Almost forty years after reinventing itself as a casino gambling destination, it looks like Atlantic City needs another makeover. Mayor Don Guardian put it better than anyone: “It’s time to open another chapter.”

Investing in non-gambling services

Gambling revenue currently makes up 71 percent of total business turnover in Atlantic City. That number is clearly too high given current circumstances. What can be done to help other parts of the city’s economy to grow?

Non-gambling amenities like restaurants, nightclubs, shops and music venues are popping up, and the city’s convention infrastructure remains extensive. The former Claridge casino is now a stand-alone hotel, and the Atlantic Club was bought by TJM properties, which plans to convert it into an entertainment complex.

The city still has beautiful sandy beaches, and the coast is dotted with amusement piers offering almost any kind of service to visitors.

The city’s other draws are alive and well. In fact, non-gambling revenues have risen by $162 million since 2012. The problem is that casino revenue fell by $2.4 billion over the same period.

Elizabeth B. Cartwell of the marketing firm Atlantic City Alliance said the following: “the challenge for Atlantic City is about accelerating the pace of change…Right now, we’re losing gaming revenue faster than we’re gaining nongaming revenue.”

New Jersey governor Chris Christie and state legislature have offered tax exemptions in order to get companies to invest in the city, something that has been mildly successful.

Is there a future for Atlantic City?

Try as businessmen and politicians may, the casino industry will never be restored to its former glory. The best it can hope for is a “managed decline.” As for other means for drawing tourists, the city has potential.

It has a lot going for it already, and its natural location means it will continue to be a draw for tourists during the summer months. But even if non-gambling services continue to grow, they’re going to have a hard time sustaining a city of 40,000 people.

It hurts to say it, but the decline looks unstoppable. Unemployment will remain high and home prices will continue to decline. The entertainment industry in the region is saturated; there simply aren’t enough reasons to choose Atlantic City. “America’s favorite playground” is simply past its prime.