Casino Boom Pinches Northeastern States

The rapid expansion of the gambling industry across the Northeast and, in particular, the Philadelphia-area, has led to tumbling revenues in states like New Jersey, where Atlantic City's economy. Jun 26, 2014  Google 'Casino Boom Pinches Northeastern States' to find a recent WSJ article with an autoplay time sequence map regarding the casino boom in the region. I tried to provide the link, but it requests a subscription when you try to access it that way.

[toc]From the time its first legal casino opened in 1978, until the early 1990s, Atlantic City was really the only place people could gamble in the Northeast.

State lawmakers with slot machine tax revenue dollar signs in their eyes started developing a more liberal attitude towards gambling in the 90s. Racetracks around the region soon became Racinos, with slots and electronic table games. Plus, a Native American and commercial casino construction boom that started around the same time has continued to this day.

Casino Boom Pinches Northeastern States

Downstream Casino Resort is owned and operated by the Quapaw Nation of Oklahoma. The Quapaw Leaderships decision to build a truly upscale state of the art Casino Resort in 2008 has proven to be the gem of the four states to this date. Jun 28, 2014  “Casino boom pinches northeastern states” (Wall Street Journal, June 19, 2014) Indeed: “States that adopted gambling earlier than their neighbors, such as Delaware, New Jersey and West Virginia, are watching dollars drain away, and new projects have some wondering how many facilities the area can support.

New Jerseyisn’t the only place to gamble anymore. In fact, the state’s casino industry revenues aren’t even the largest in the region anymore. They’ve been passed by Pennsylvania and the more than $3 billion that state’s casinos pull in annually.

So many casinos have been built across the Northeast, market saturation looks like its right around the corner.

In fact, two revamped gambling operations are now set to reopen in Atlantic City in 2018. Plus, two billion-dollar commercial resort casinos are getting ready to launch in Massachusettsand New York this year. As a result, the Northeast casino industry is rapidly approaching its tipping point.

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Will the Northeast run out of gamblers?

The question is: Will the casino industry stop building new gambling facilities in the northeastern US before it runs out of gamblers to fill them?

The answer is apparently no. Construction of a new sports-arena area casino in Philadelphia is underway. Plus, Pennsylvania appears poised to green light up to ten new mini casinos. All this with the first signs of saturation already presenting themselves in the Empire State, where three newly built commercial casinos have failed to live up to lofty revenue expectations.

The Tioga Downs Racino in Nichols, NY became a full-service casino in December 2016. Operators said they expected to pull in $103 million in revenue in year one. It now appears Tioga Downs will end up $30 million short of that mark.

Del Lago Resort & Casino in Tyre, NY opened in February 2017 having projected revenues of $263 million its first year. Del Lago looks like it will end up about $100 million short of that.

Finally, Rivers Casino & Resort in Schenectady, NY also opened in February. Operators projected $222 million in revenues during its inaugural year. Now they’re saying they’ll miss that by as much as $80 million.

A coming increase in competition isn’t likely to improve things either.

Casino competition is only increasing

A fourth new commercial casino property is just wrapping up construction in upstate New York. The $1.2 billionResorts World Catskills is scheduled to open in March 2018.

Casino Boom Pinches Northeastern States

All signs point to this property having a tough time grabbing a real share of the local gambling market. Particularly since its nearest competitors have had such a tough time doing so. Plus, the Catskills is truly a seasonal resort area that only draws visitors for four months of the year, at best.

Atlantic City draws its customer base from pretty much the same pool of Northeastern US gamblers. Its casino offering is expanding this year as well. Hard Rock International is giving the now-defunct Trump Taj Mahal a $500 million face lift, and will reopen it as the Hard Rock Hotel & Casino Atlantic City in the summer of 2018.

Plus, a developer recently purchased the failed former Revel Casino Hotel in Atlantic City for $200 million. It is being re-branded as the Ocean Resort Casino with plans to open this summer as well.

The $960 millionMGM Springfield is expected to open in Massachusetts in September 2018. It will likely keep gamblers in New England out of New York, New Jersey, and Pennsylvania.

As a result of all this, the question of where these new Northeast casinos, and the existing ones, are going find gamblers to fill them has become a real concern. One that opening more new casinos and rebuilding old ones is only going to exacerbate.

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ATLANTIC CITY

A DECADE into the century, New Jersey got a new governor who vowed to cure what ailed this place. The story has a familiar ring today, but that governor was Woodrow Wilson, and the year was 1910.

A long line of public figures have tried to “fix” Atlantic City, including reformers who have attacked the corruption that was baked deeply into local politics, but most of them, including Wilson, had little lasting impact. Their experience is a cautionary tale for the latest in that line, Gov. Chris Christie, who announced plans last month to revive this city’s flagging economy by having the state essentially take over municipal operations in the casino district.

For generations, politicians tried to combat vice; for the last four decades, they have promoted it. Either way, Atlantic City’s fortunes have risen and fallen mostly on two factors: how easy it made access to gambling, liquor and sex — or some combination of the three — and how hard they were to get elsewhere.

The city’s heyday came during Prohibition, when alcohol, gambling parlors and brothels flourished openly, protected by a powerful political boss, Nucky Johnson.

“There was a social compact between people who understood the law had to be violated or ignored for the city to succeed,” said Nelson C. Johnson, the author of a history, “Boardwalk Empire,” that inspired a coming HBO miniseries of the same name. “The government, the resort industry and the rackets were closely tied, and they had a joint vision for the town.”

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Atlantic City’s population peaked at more than 66,000 in 1930, slipped below 60,000 in 1960, and by 1980 plunged to about 40,000, where it remains. The introduction of casino gambling in 1978 sparked a revival of the economy, but the city has been pummeled since 2006 by the explosion of legalized gambling nearby, in Pennsylvania, Delaware, New York and Maryland.

Now, residents, politicians, business owners and financial analysts are asking whether Atlantic City is at another turning point — or at death’s door. Can it hold on to the resort market share it has, or even regain some of what it has lost? Can it recover by adopting a new identity and a new appeal? Or is it fated to endure another long, steady slide?

Gambling profits at the city’s 11 casinos are down almost 30 percent since 2006 (nearly double the rate of decline in Las Vegas); the casinos have shed 12,000 jobs in recent years.

The signs of trouble were obvious on a midsummer visit, during what should be the peak season. The famed Boardwalk was not crowded, there was no wait for tables at popular restaurants, tickets were still available days before a Black Eyed Peas concert, and rows of slot machines sat unused, blinking away at no one. Prime real estate parcels lie vacant on the Boardwalk, where projects like the Pinnacle casino never came to pass and construction stopped recently on the Revel, which was supposed to become the city’s largest casino hotel but is now looking for a new owner.

It is a far cry from the city that first blossomed in the 19th century as a cheap beach getaway with easy railroad access from Philadelphia.

Atlantic City became a place for visitors to cut loose in a gaudy, carnival atmosphere where prostitution and illegal gambling flourished. Serving alcohol on Sunday, in open violation of state law, was a pillar of the economy. In 1908, Gov. John Franklin Fort called the city a “Saturnalia of vice.”

A few years later, Wilson’s administration managed to send Louis Kuehnle, the boss of Atlantic City, to prison, but that barely made a dent. Instead, it cleared the way for Enoch L. Johnson to take over and become the most powerful ruler the city has had. Johnson, known as Nucky, became close to the mobster Lucky Luciano, and in 1929 he welcomed to Atlantic City the first national meeting of organized crime leaders, including Al Capone.

The political machine, nominally Republican, ran the town with corruption so thorough as to make other cities’ political bosses blush. Every bid was rigged, every contractor paid kickbacks, every public employee had to pay the machine, and the police, prosecutors and judges were in on it.

Routine vote fraud produced turnouts big enough to make little Atlantic City a force in statewide politics. Reform movements out of Trenton stopped at the bridge to Absecon Island.

“It was corrupt, but people didn’t care, because it worked,” said Mr. Johnson, the historian, who is also an Atlantic County judge and no relation to Nucky. “The system took care of people’s needs, and the money came from out-of-towners.”

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But even at the city’s peak, poverty was pervasive, particularly on Atlantic City’s mostly black north side. An economy dependent on summer crowds offered mostly seasonal jobs, leaving workers struggling the rest of the year.

After years spent digging into Atlantic City, the Federal Bureau of Investigation shut down brothels in the late 1930s and finally nailed Nucky Johnson, who went to prison in 1941 for tax evasion.

By then, the city was already in decline — the end of Prohibition had taken away its advantage, and the Depression had left fewer people with money to burn. During World War II, the military insisted that the illegal gambling rooms be shut down so that servicemen stationed in the city would not be fleeced. The proliferation of cars after the war gave people access to many more resort locales.

But if the crowds faded, corruption did not. The political machine that exercised lock-step control of the city remained long after Nucky Johnson, even as there were fewer spoils to divide.

City leaders attracted the Democratic National Convention in 1964 — a precursor to the current calls to reinvent the casino district as a convention magnet — but that backfired. Reporters from around the country portrayed a city in decay, and delegates complained about an infrastructure so frayed that it could not meet basic demands like phone service and air-conditioning.

A 1972 shootout in an Atlantic City nightclub between rival Philadelphia drug gangs killed four people, wounded many more and cemented the city’s image as a dangerous place. The perception of crime, as much as the reality of it, remains a major problem.

But the 1970s also brought the one movement to cure Atlantic City that had a notable effect: the campaign to legalize casinos, approved by New Jersey voters in 1976. The first casino, Resorts International, opened two years later, to success beyond any predictions. The casinos gave the city a year-round economy for the first time, a building boom brought construction jobs, and gambling taxes became a reliable revenue source for the city, the county and the state.

“Everyone understood that it was the one thing that could bring the city back,” said Mayor Lorenzo T. Langford, who has worked as a dealer and pit boss in casinos.

But the expected population rebound never materialized, and the vast majority of casino workers live outside the city. Twenty-six percent of Atlantic City residents lived in poverty in 2008, double the national rate. The city’s north side is riddled with empty lots where dilapidated houses have been torn down; there are ample vacancies in pricier parts of town, too, where developers and real estate speculators mistimed the market.

One critical decision that has been second-guessed was allowing casinos — including the newest and most profitable, the Borgata — in the marina district, which drew patrons and revenue away from the historic tourist core along the Boardwalk.

The old political machine was replaced by a kind of freelance corruption, with constant jockeying for advantage among rival factions, frequent turnover, and no one really in charge. Espn poker club download free. In the last 40 years, there have been criminal convictions of five mayors and countless other officials.

(Mayor Langford has his own peculiar situation. His allies helped arrange for an $850,000 settlement in 2002 to a lawsuit he and a City Council colleague had filed against the city before he became mayor. The courts ruled that the settlement was poisoned by conflicts of interest and ordered the money returned, leaving Mr. Langford among the debtors to his own impoverished city, making piecemeal payments.)

Casino Boom Pinches Northeastern States Of America

Meanwhile, as gambling continues to expand in neighboring states — Pennsylvania and Delaware both recently added table games to their slot-machine parlors — Atlantic City casino operators and local and state officials have not reached a consensus on how to change the city’s appeal.

“What’s fascinating to me is this town’s always been able to sell itself, to sell something beyond its true worth,” Nelson Johnson said. “I’ve seen it all my life, and maybe we’ll see it again.”