At its peak, Atlantic City had 12 casinos.
Now, the Jersey Shore gambling and entertainment destination has just seven, the lingering result of the economic downturn as well as competition from neighboring states that have legalized gaming in recent years.
But the city is hoping its fortunes will change, thanks to a few promising developments.
This week, Hard Rock International unveiled plans to spend $375 million to renovate the shuttered Taj Mahal building. The new Hard Rock Hotel and Casino Atlantic City will reopen in summer 2018 on 17 acres of prime Boardwalk real estate.
“I agree that the market has had challenges in recent years,” says Jim Allen, chairman of Hard Rock International. “But it’s still the second largest gaming market in the United States. And when you look at the asset … with more than 2,000 rooms and a lot of amenities—certainly it will need a renovation—but we believe the building on a long-term basis will have a tremendous opportunity to be successful.”
The city finally saw an upturn in 2016. Internet gambling, which began in 2013, is what put them over the edge. Last year, revenue from internet gambling in New Jersey increased 32% to nearly $197 million. The city has also expanded into mobile gaming, skill-based games and fantasy sports play.
That came after the state enacted legislation in 2011 that included sweeping deregulation and regulatory reform to help the Atlantic City casino industry cope with a competitive and saturated gaming market, says David Rebuck, director of the New Jersey Division of Gaming Enforcement.
“It is important to emphasize that gaming is a growth market in the United States and in order for Atlantic City to remain competitive, it is crucial to stay on the leading edge of this evolving industry,” Rebuck says.
It used to be that Las Vegas and Atlantic City were the only players in the gambling world. Atlantic City had such a storied history that the first version of the Monopoly board was based on the seaside town. They city inspired the hit cable show Boardwalk Empire.
Founded in the 1850s, Atlantic City was a getaway for wealthy east coasters. To attract the elite, developers built high-rise luxury hotels with names such as Ambassador, President and Ritz-Carlton. President Ulysses S. Grant once vacationed there.
By the 1920s, the movie stars and musicians started rolling in. Marilyn Monroe could be seen cavorting about town. Frank Sinatra had some of his first gigs there. Once he was famous, he returned with his Rat Pack buddies. The Miss America Pageant took place there every year.
The gangsters also showed up—Meyer Lansky, Al Capone, and Lucky Luciano among them.
Tourism reached its peak in that era, particularly during Prohibition because officials did not enforce the alcohol ban.
Up until the 1960s, the town was also home to famous nightclubs such as the 500 Club, one of Sinatra’s favorites.
The city’s run as a Boardwalk Empire ended in the mid-1900s, when improvements in transportation meant people who craved the beach could head to Florida.
After years of neglect, gambling was approved in 1976, and the luxury hotels were torn down to make room for large casino resorts, such as Caesars Atlantic City.
President Donald Trump once had casinos there, including the Trump Plaza Hotel and Casino. His venues became popular for hosting wrestling and boxing matches, including many of Mike Tyson’s.
Even Sinatra returned, performing for 25 years at various casinos including the Sands.
But by 1992, casinos began opening elsewhere as other East Coast states began to pursue legalizing gambling. Foxwoods Resort Casino ushered in the era of gambling outside of Atlantic City when it opened that year.
And in 2006, the first Pennsylvania casinos opened, providing even more competition for Atlantic City, which drew much of its clientele from that state. That year was the first time Atlantic City saw its revenues drop.
“Atlantic City was built up during a period when it had a monopoly in the East,” says Doug Walker, who specializes in the social and economic impact of gambling as a professor of economics at the College of Charleston. “Since casinos began spreading outside of Vegas and Atlantic City, it was inevitable that they would see more regional competition.”
So far this year, the city is reporting that revenues are continuing to increase. But it remains to be seen if more casinos will join the Hard Rock in making an investment in the city.
“Revenues at surviving casinos have increased since a few years ago,” Walker says. “This is how markets work; the weakest firms may go out of business or are replaced. It seems particularly drastic in Atlantic City … It would have never been built so large if casinos had always been a more competitive market.”
The competition for Atlantic City will continue to increase as states such as New York consider opening more casinos.
Already in Massachusetts, Wynn Resorts and MGM Resorts International are developing properties.
But Allen of Hard Rock says he’s not concerned about what’s happening elsewhere. He points out that the tax rates in surrounding states are much higher than Atlantic City’s and that investors will be more willing to invest in Atlantic City properties and bring more jobs to the city.
“It’s Atlantic City that has a competitive advantage,” he says. “It’s a very welcoming area to do business.”
Top U.S. casino and racetrack markets
1. Las Vegas Strip, $6.3B total revenue in 2015
2. Atlantic City, $2.4B
3. Chicagoland, $2B
4. New York City, $1.4B
5. Detroit, $1.4B
6. Baltimore/DC, $1.3B
7. Philadelphia, $1.2B
8. Miss. Gulf Coast, $1.1B
9. St. Louis, $1B
10. The Poconos (Pa.), $965M