New promise and old problems due in 2019 for Atlantic City
The new year holds promise and peril for Atlantic City, with new benefits facing off against old problems.
The East Coast gambling resort is on something of a roll, having regained its balance as a smaller market following years of casino closings and job losses.
It is part of New Jersey’s skyrocketing sports betting market, which could rival that of Nevada before too long. Atlantic City reversed some of the casino closings and job losses by reopening two of the five casinos that shut down since 2014, and a new college campus has brought thousands of students and renewed economic activity to the downtown area.
But the city also faces some familiar problems in 2019. Some analysts and industry executives worry Atlantic City could be making the same mistake that helped bring about the casino crisis in the first place — having too many casinos in a market that can’t support them all.
And after a period of political calm, the city again finds itself in the crosshairs of outside law enforcement agencies: The FBI raided the home of Mayor Frank Gilliam Jr. in December, carting away boxes and computer equipment. No charges have been filed as a result of the raid, and authorities have been tight-lipped about it since.
Here’s a look at some big questions facing Atlantic City in the new year:
GETTING (AND BETTING) IN THE GAME
Sports betting has been on a rocket ride since it began in New Jersey in mid-June, with $928 million worth of bets having been made between then and the end of November. That has provided the state’s casinos and racetracks with $73.2 million in revenue, and generated nearly $8 million in taxes. That kind of money, while nice to have, won’t make or break a casino. But when coupled with winnings from internet gambling, sports betting provides another revenue stream for Atlantic City’s casinos. All eyes will be on the city in the run-up to the Super Bowl and the March Madness college basketball tournament to see if enthusiasm for sports betting translates into occupied hotel rooms, packed restaurants and busier casino floors.
Last year saw the reopening of two of the five shuttered casinos. The former Trump Taj Mahal reopened as the Hard Rock, and the former Revel reopened as the Ocean Resort, both on the same day, June 27. The new jobs and weekend hotel rooms were welcomed in a resort city still smarting from the casino shutdowns. But almost immediately, the question became whether Atlantic City, which had been doing reasonably well as a slimmed-down resort with seven casinos, can support nine. And if not, would one or two of the weaker properties go out of business? The first quarterly earnings statements following the two reopenings weren’t promising: Gross operating profits for the third quarter were down 15.3 percent as customers flocked to try out the new properties, at the expense of the existing ones.
CSI ATLANTIC CITY
Both the FBI and Gilliam have hardly uttered a peep about the Dec. 3 raid on the mayor’s home. He has not been charged with a crime and continues to work as mayor. But the timing of the raid, coming shortly after the mayor and a city councilman were involved in a late-night brawl outside a casino nightclub, hardly helped make the case to New Jersey officials that it’s time to end a state takeover of the resort’s finances and major decision-making power. Gov. Phil Murphy, a Democrat like Gilliam, campaigned on ending the takeover that his Republican predecessor Chris Christie began. But last year, Murphy’s administration said the takeover would remain in place for up to three more years — or the entire term Christie had intended it to last.
The new year could be a good one for Atlantic City in terms of bringing more people to live in and near the casino zone, with hoped-for effects of economic activity spilling over into adjacent neighborhoods. Stockton University will wrap up its first school year in its new Atlantic City campus. Nearly 1,400 students attend classes, and about 500 live there. A new headquarters for a natural gas utility was built as part of the university project. At the opposite end of the city, the Showboat hotel, one of the five casinos that recently shut down but which reopened as a non-gambling property, will convert 400 hotel rooms into 264 market-rate rental units. The goal is to create a denser community in parts of the city that are sparsely populated. And right across the street from the Showboat, 250 units of market-rate rental housing will open this year.
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