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A Millennial Moment

It seems that Atlantic City has suddenly become "hip" with the millennials

A Millennial Moment

Something is happening in Atlantic City. You remember Atlantic City? The town where four casinos went belly-up in 2014… where more than 8,000 casino workers lost their jobs… and where property taxes are so high, no one would take the shuttered Revel casino even if it was given to them. Right, that Atlantic City.

Something unexpected and flying beneath the radar is giving locals hope. It seems that Atlantic City has suddenly become “hip” with the millennials. Right, when I first heard that, I thought the person explaining how it happened was crazy. But when I began hearing the same thing over and over again, not only from locals but friends from New York and Philadelphia, I realized there was at least a grain of truth there.

A childhood friend of mine from Brooklyn told me her 30-something daughter and friends visit Atlantic City on a regular basis to “get away from it all” in New York. It seems AC has become a hot spot for bachelor and bachelorette parties.

A casino executive explained that these kids rent a room on the weekend for $300 a night or more and cram eight to 10 friends in one room. Of course, most of them spend the night at the clubs, so rarely are they in the room at the same time. They’re more than willing to pay $15 per cocktail or get expensive bottle service. And believe it or not, they even gamble! Not high rollers by any stretch, but they do throw a few chips down on a blackjack table (not often slot machines, however).

So, has Atlantic City won the race to attract the millennials? Maybe so, but what’s the prize?

An article by Wall Street executive Steve Rattner published in The New York Times in late July presented some jarring information about the millennial generation, which is currently defined as anyone born after 1980. Someone born in 1994 is currently eligible to enter any casino in the U.S. (This makes me feel really old!)

Rattner tells a story of a generation that isn’t nearly as affluent as its predecessors. Their median income is almost $3,500 less than people their age in 1980 (adjusted for inflation, of course). Their median net worth—$10,400—is almost half that of that of Generation X that peaked in 1995. The cost of college tuition has soared almost 250 percent in that period (versus just 63 percent inflation). So, it’s no wonder that 71 percent of bachelor’s degree recipients graduate in debt (versus only 46 percent in 1995). And that debt averages more than $55,000, versus only $26,500 in 1995.

The big problem, says Rattner, is the daunting financial hurdles facing the millennials as they move forward. Most problematic is the federal debt as a percentage of gross domestic product. Right now, it has soared to 74.1 percent, versus less than 40 percent only 15 years ago. By the time millennials reach retirement age, that percentage will be anywhere between 120 percent and 140 percent. Less than half of millennials expect to cash in on Social Security or Medicare.

Now, the casino industry clearly can’t solve the problems facing millennials. Rattner says it can only be addressed by reforming entitlement programs and reducing the cost of a college education.

So, are these millennials really the future of the casino industry? Well, considering there are no other options, the casino industry needs to understand the economic pressures under which millennials labor.

Does that mean 10 people sharing one hotel room while everyone parties all night? Maybe. But marketing executives need to understand not only what millennials want but also how they expect to pay for those things. Packages that will offer millennials value, give them the experiences they desire and keep them connected via all their devices could be a winner.

So while Atlantic City seems to have

stumbled onto a positive trend for a change, how long will that continue? Millennials will grow up, have children and buy homes (but not nearly as often as their predecessors, according to Rattner). But they will still need to recreate. Casinos need to figure out how to provide

these moments for the millennials, but it won’t be easy.

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