With the Showboat Casino closing later this summer, Atlantic City residents and officials fear more will follow.
Dave Rose spent 19 years working as a cook at the famous Mardi Gras-themed Showboat Casino, run by Caesars Entertainment. Now he is counting the weeks left until the venue closes, when he and his fellow workers – about 2,000 people in total – will all be out of work.
The casino is shutting down this summer, after quarterly revenues fell over 60% compared to last year. Earlier this year, the legendary Atlantic City Club went out of business too and the Revel will be facing the same fate if its current owners don’t find a new buyer. And it’s very unlikely that they will.
Tough times for Atlantic City
Apart from New Jersey, gamblers visiting northeastern America can opt for:
Closing casinos seems to have become a trend in the New Jersey shore city and officials are talking about a revamp of the former gambling Mecca. Atlantic City needs to rely less on its casino revenues and start offering more family-friendly attractions, they believe.
“They’ve been saying that for ten years,” said Dave Rose, who doesn’t really believe this strategy will work. The man fears he’ll have a hard time finding a new job that offers $18.18 per hour. That’s how much he was paid at the Showboat.
There are clearly few job opportunities in the city, which has the among the highest unemployment rates of any US metropolitan area. Earlier in May, it stood at 10.3%. Back then, the national rate was at 6.3%, but has fallen to 6.1% in June.
Atlantic City used to be the most lucrative gambling market on the East Coast, but over the past few years the casino business has fallen hard. In 2006, the city’s gambling industry generated $5.2 billion in revenue. Now, profits have almost halved, falling to $2.8 billion.
Casino saturation brings AC down
The industry has grown in northeastern America and this sudden casino boom has brought the former gambling Mecca down. With American gambling laws leaving it up to each state to decide whether they want to allow casinos or not, Atlantic City’s gaming monopoly is over.
Now states like New York, Pennsylvania, Delaware, Maryland and Connecticut have casinos too and Massachusetts is planning to join them. The state is in the process of awarding new licenses. Atlantic City’s casino kingdom is shaking and the future of its 10 casinos is uncertain.
Despite the support it had from New Jersey Governor Chris Christie, when it opened in April 2012, the Revel casino has filed for bankruptcy for the second time in its history. The venue has more than 3,000 employees and is said to be losing $2 million per week, even during the summer season. If its owners don’t find a new buyer, the casino will close in a few weeks.
John Palmieri, executive director of the New Jersey Casino Reinvestment Development Authority said: “We still have five or six relatively successful casinos. There were 12. Can we support nine? Will that end up dropping to seven or eight? That’s the big question.”
Add to this the growing number of users migrating to online casinos in the US state of New Jersey and you have the perfect recipe for disaster.
The solution: cutting costs
With no more casinos to generate tax revenue, the city stands to lose a significant part of its local budget. Michael Busler, a professor of finance at Richard Stockton College in Galloway, New Jersey said the city used to rely on these gambling venues to provide about 80% of its tax income.
“We aren’t done dropping yet,” he claims. “What (the mayor) has to do is get spending way down.”
The new mayor of Atlantic City, Don Guardian, took office early this year. What he found was a $10 million budget deficit from last year. This figure might go up if officials don’t take some sort of action.
According to information released by the US Census Bureau, almost one in three local residents live below the poverty line. Compared to the rest of the state of New Jersey, Atlantic City has triple the poverty rate. Clearly, authorities have to rethink their strategy.
Could revamping Atlantic City be the answer to these problems? Maybe. In any case, it’s becoming clear that the casino industry is not as successful as it used to be and that state governments have to identify new sources of revenue.