The rapid disintegration of Atlantic City's casino market
might be an early indicator of what could happen in other parts of the country
that have too many casinos and not enough gamblers.
In the 36th year of casino gambling in New Jersey, which not
too long ago had a monopoly on the East Coast, the casino industry is crashing
with a suddenness and a fury that has caught many people here by surprise. It
started the year with 12 casinos; by mid-September, it could have eight.
The Atlantic Club shut down in January, taken down by two
rivals, stripped for parts and closed in the name of reducing competition,
eliminating 1,600 jobs.
In recent weeks, the owners of the Showboat and Trump Plaza
announced plans to close, and Revel, which opened two years ago, said it, too,
will close if a buyer can't be found in a bankruptcy court auction next month.
That would put nearly 8,000 workers — about a quarter of the city's casino
workforce — on the street.
"Most of us had expected one or two places to close
this year and that would be it for a while, and it would give us a chance to
catch our breath," said state Sen. James Whelan, a former Atlantic City
mayor. "This is happening very quickly, and it is absolutely devastating
to our region."
David Schwartz, director of the Center for Gaming Research
at the University of Nevada Las Vegas, said casino markets around the country
could find themselves in a similar situation — and soon.
Connecticut's tribal casinos have been affected by New York
casinos and face an even greater challenge from new casinos going online soon
in New York and Massachusetts. Mississippi, where Caesars Entertainment
recently shuttered a casino in Tunica, has struggled with competition from
expanded gambling in the Midwest and Florida.
Even Pennsylvania, which overtook Atlantic City as the
nation's No. 2 casino market, is seeing its own casino revenue stagnate as
competition grows.
"For the past 36 years, Atlantic City was basically a
place people drove to play slots," Schwartz said. "Now, the last
thing people in the Northeast need is to drive somewhere far away to play
slots."
How did this happen?
The most immediate and powerful reason Atlantic City's
casinos are struggling is because of a glut of casinos in nearby states. Since
late 2006, when the first casino opened in neighboring Pennsylvania, Atlantic
City's casino revenue has fallen from $5.2 billion to $2.86 billion last year.
Casinos have now popped up all around New Jersey; in New York, a Manhattan
casino could open before the end of the decade.
The casinos failed for years to plan for the day when they
wouldn't be the only game in town. For decades, they were content to offer
gambling — and little else. It wasn't until the Borgata entered the market in
2003 that Atlantic City realized the need to diversify the experience their
customers could receive. That drive to offer spas, gourmet restaurants, upscale
shopping and hip nightclubs — now underway with a fierce urgency — comes at a
time when most people in the region live within an hour of a casino, lessening
the need to drive to Atlantic City.
Source: ABC
News
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