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Backing the Boardwalk

We highlight the saturation that the gaming industry is encountering, and Atlantic City is the poster child of this phenomenon

Backing the Boardwalk

My life has been intertwined with Atlantic City for years. I was an original dealer at the city’s second casino, the Boardwalk Regency, now Caesars Atlantic City. Four of my five children were born in Atlantic City. I wrote my first words about the industry in Atlantic City. And I still have a house in Atlantic City that I love dearly.

So that’s why the decline of Atlantic City has been so painful for me.

In this issue, where we highlight the saturation that the gaming industry is encountering, Atlantic City is the poster child of this phenomenon. The incursion of competition into the surrounding states has decimated a market that hadn’t seen a revenue decline in 30 years. Now, in hindsight, so-called “experts” wonder why Atlantic City didn’t do more to avoid this situation.

But what could be done? In gaming, like real estate, it’s all about “location, location, location.” Who can ever forget Tunica County in Mississippi? When gaming first came to a section of the county along the river, four or five casinos popped up and were raking money in hand over fist. But when an area opened about 15 minutes closer to the major Memphis market a year later, those casinos closed in quick order.

So when customers could go to casinos in Delaware, Pennsylvania and New York, saving anywhere from one to two hours of driving, Atlantic City was doomed.

Let’s look back in history to the time Atlantic City was booming with no competition. In the 1980s, money was pouring into the city despite efforts by the state to kill the Golden Goose. No sane company was going to invest more money than necessary when the state tried to limit profits and strangle innovation. Tom Kean, who was governor most of those years, appointed regulators who were consistently opposed to any expansion. Kean, however, did appoint the one regulator who began to turn the mighty regulatory ship, Frank J. “Pat” Dodd.

So in the ’90s, with the regulatory squeeze easing, Paul Rubeli, who ran the parent company of the Tropicana, produced a study that pointed out that customers who stayed in hotel rooms were immensely more profitable than players who drove in or were bussed in. So a boom in hotel rooms started, resulting in large properties, some of which now exceed 2,000 rooms. Many thought that would be Atlantic City’s salvation, but casino executives would rather have players producing those profits in those rooms rather than conventioneers, always the lifeblood of Atlantic City.

When Borgata opened in 2003, despite fears to the contrary, it truly expanded the market with a modern building and amenities, and better customer service. Plans were drawn up for other “Borgata-style” hotels. But then the bottom fell out.

After Atlantic City weathered Northeast expansion in Connecticut and Delaware in the 1990s, casino executives were cavalier about similar expansions in Pennsylvania and New York, to their everlasting chagrin. It took just as long for customers to get to Delaware and Connecticut casinos as it did to get to Atlantic City, but when Pennsylvania and New York introduced gaming, casinos were suddenly closer to home, and the market shrunk as a result.

So what could have been done? It’s being done now, albeit a little late in the game. With Governor Chris Christie’s support, Atlantic City has a new marketing organization funded by the casinos. The formerly plodding state agency, the Casino Reinvestment Development Authority, is now directing operations in the tourism district of the city. Online gaming has been approved to help shore up revenues (no pun intended) and become another marketing vehicle.

I’ve been accused of being the premier Atlantic City booster. I plead guilty (although I humbly defer to radio talk show host Pinky Kravitz, who anyone who has ever even passed through AC will know). I still live there. I still have faith that Atlantic City can survive, and, yes, thrive.

Will Atlantic City ever return to the prominence it once held in the gaming industry? That would be a firm “no.” But it’s still a $2 billion market, nothing to sneeze about, and Atlantic City will “right-size” in a somewhat painful fashion over the next few years. But Atlantic City will always be “something”—whether it’s a South Beach or a Long Beach, it will be unique. No one will ever have what Atlantic City has always had and still has: a concentration of gaming halls along a pristine beach, and a spectacular Boardwalk, with a collection of diverse non-gaming amenities that can be a magnet for the rich and famous, or the desperate and hopeless.

Either way, I’ll be there.

Roger Gros is publisher of Global Gaming Business, the industry's leading gaming trade publication, and all its related publications. Prior to joining Global Gaming Business, Gros was president of Inlet Communications, an independent consulting firm. He was vice president of Casino Journal Publishing Group from 1984-2000, and held virtually every editorial title during his tenure. Gros was editor of Casino Journal, the National Gaming Summary and the Atlantic City Insider, and was the founding editor of Casino Player magazine. He was a co-founder of the American Gaming Summit and the Southern Gaming Summit conferences and trade shows. He is the author of the best-selling book, How to Win at Casino Gambling (Carlton Books, 1995), now in its fourth edition. Gros was named "Businessman of the Year" for 1998 by the Greater Atlantic City Chamber of Commerce, and received the Lifetime Achievement Award from the American Gaming Association in 2012.

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