Is Atlantic City’s Decline Just Starting?

A report by a Stockton College economist warns that Atlantic City’s casino industry may be at the start of a long period of retraction that would devastate the southern New Jersey economy. Still, New Jersey officials are talking about building more casinos in the northern part of the state. Meanwhile, more than 60,000 fans turned out for a Blake Shelton concert on the beach last week.

As Atlantic City faces an unprecedented shutdown of casino properties and loss of casino jobs in the next two months, there’s one thing experts agree on about the resort’s future.

Things are likely to get much worse before it gets better.

A new report from the Richard Stockton College of New Jersey—located just a few miles from Atlantic City—warns that Atlantic City’s shrinking economy could lose between 6,328 and 14,258 casino jobs in the next few years.

That translates into between $158 million and $376 million being removed from the local economy according to possible scenarios examined by Oliver Cooke, an economics professor at the college.

“Atlantic City’s decline is the worst among the 372 metropolitan areas the U.S. Bureau of Labor Statistics provides seasonally adjusted data for,” Cooke said in the report.

Cooke said the closing of casinos ostensibly to “right-size” the city’s casino market will “push the local and regional economy to the brink over the near-term and will have significant adverse multiplier effects on the regional economy.”

Three Atlantic City casinos—Revel, Showboat and Trump Plaza—have notified employees that they may close at the end of the summer putting more than 6,500 jobs at risk.

There has been some hope that the casinos can be saved. Revel is up for sale at a bankruptcy auction this week and a buyer for Showboat has been rumored to have emerged. Atlantic City Mayor Donald Guardian has said he has seen a “strong” proposal for Showboat, but did not name the possible buyer. Sources tell GGB News that Hard Rock International, owned by the Seminole tribe, is taking a hard look at the property. The House of Blues venue would close in any case, and a Hard Rock entertainment project would be installed.

Even if some of the three casinos stay open, experts have said Atlantic City simply has too many casinos in the competitive Northeast casino market and needs to shrink its casino base, meaning more closings could follow.

Still, many in Atlantic City think the resort is making progress in diversifying its attractions and note that non-gaming revenue has risen by $160 million in the city in the last two years.

Atlantic City, for example, just hosted two free concerts on its beach featuring country artists Blake Shelton and Lady Antebellum respectively. More than 60,000 free tickets—tickets were issued to avoid overcrowding—were issued for each concert and crowds lined-up in the early morning for the two evening shows. Boardwalk business owners said they experienced some of their busiest days this summer, according to local reports.

Initiatives like the concerts are seen as a new strategy for the resort.

John Palmieri, who heads the state Casino Reinvestment Development Authority, told the Cherry Hill Courier Post that the Stockton report was a “pessimistic outlook,” and that the authority plans to release its own economic report in a few weeks focusing on increasing special events and non-gambling attractions in the city.  

Palmieri said that if any of the casinos are repurposed—including The Atlantic Club casino, which closed in January—that could help soften the immediate blow to the city, but acknowledged that there will be “net losses in the short-term” in the labor force.

Plans for North Jersey Casinos

Cooke’s report also warned that uncertainty in New Jersey on a plan to build two new casinos in the Northern part of the state will hurt the investment atmosphere in Atlantic City.

In recent weeks a proposal to build a massive casino project adjacent to New York City in Jersey City has emerged and plans have re-emerged to allow a casino in the Meadowlands Sports Complex.

The Jersey City proposal would put a $4.6 billion casino entertainment complex in Jersey City. The proposal comes from a group led by Paul Fireman, founder of Reebok International, and includes a 95-story tower, the world’s largest Ferris wheel and an autoracing stadium.

Now Jeff Gural, private operator of Meadowlands Sports Complex in East Rutherford, has gone on record as saying he wants to see a second North Jersey casinos adjacent to the Meadowlands harness racing track’s new $88 million grandstand that opened in November.

Other possibly interested parties include developer Triple Five, The New Jersey Sports and Exposition Authority and the Giants and Jets, which have their stadium at the complex, Gural said.

“There’s a long way to go, such as a referendum in November 2015 having to pass, and nobody has promised me anything,” said Gural. “But I’d be disappointed if we weren’t the casino operator.”

A bill to allow the casinos has been introduced in the New Jersey Legislature, but any expansion of casinos would require approval of voters. It’s unlikely a referendum could go before voters until November 2015.

That would come sooner than an unofficial five-year moratorium on expanding casinos outside of Atlantic City. In 2011, Governor Chris Christie gave the resort five years to try and turn itself around with the help of a new state-administered tourist zone.

Many southern New Jersey politicians—and some northern ones as well—feel the city should get its full five years before any expansion plans are considered as expanding casinos in the state would further bleed the Atlantic City market.

But even Christie has acknowledged that as Atlantic City’s casino revenue continues to decline, the moratorium may no longer make sense.

The Stockton report points out that the debate could already be hurting Atlantic City.

Uncertainty about additional casinos coming to North Jersey will make the situation worse and “undermine Atlantic City’s short-term health. It is likely to deter private sector investment until a final decision by state lawmakers has been reached,” the report said.

Some experts point out that northern New Jersey casinos could even hurt plans by New York State to build four new casinos in the state as the East Coast gambling market continues to get saturated with casinos. The proposed New Jersey sites would be closer to Manhattan than nearly all of the proposed New York sites.

Job Fairs

Meanwhile a push is on to help Atlantic City casino employees in immediate danger of losing their jobs including moves by some out-of-state casinos to hire from the city’s experienced workforce.

Maryland Live! recently held a job fair in Atlantic City and as many as eight more have been scheduled by the state’s Labor Department.

Maryland Live! had already held a similar job fair in Atlantic City when the Atlantic Club casino folded in January, eventually hiring about 50 former Atlantic Club employees.

“Atlantic City has proven to be an excellent source of qualified candidates for us,” said Howard Weinstein, the casino’s senior vice president in a press statement. “The workforce provides a pool of experienced talent for available positions across all departments.”

Similarly, other casinos—such as Sands Bethlehem—have been running employment ads in Atlantic City’s local media aimed at displaced casino workers.

Meanwhile, Showboat Atlantic City will host eight small job fairs from July 28 to August 15.

The fairs will include non-casino employers, such as Comcast, Verizon and Wawa, Elaine Williams, of the state Department of Labor and Workforce Development, which is coordinating the fairs, told the Press of Atlantic City.

Other fairs will concentrate on casino employment with representatives fr
om Golden Nugget, Borgata, Sands PA, Mohegan Sun and Sugarhouse scheduled to attend, she said.

Meanwhile, Atlantic County’s Board of Chosen Freeholders is considering adopting an ordinance to protect casino workers that would require casinos to notify the county at least 60 days before a shutdown and also retain current employees for three months after a sale.

The county wants the notice to better prepare job programs and unemployment assistance in the wake of large layoffs. The board is studying the legality of such an ordinance, but officials acknowledged that the county may not have the jurisdiction in the state to enact the measure.