Atlantic City backers hope the opening next month of a new $2.4 billion casino – with a live performance by Beyonce – will give the struggling Jersey Shore town a much-needed shot in the arm. But the reality is the new casino could be Atlantic City’s last gasp. That is the case I make in this piece for Philadelphia Magazine.
Atlantic City has been hammered by the opening of casinos in Pennsylvania. More competition looming in New York could well provide a knock-out punch. Then again, Atlantic City has never lived up to its hype. After 30 plus years of casinos, the town is pretty much a dump.
The opening of the upscale Revel casino is likely to take business away from other A.C. casinos, rather than attract new gamblers. One casino has elected to not even try to compete, and is instead going downmarket to attract low rollers with cheap rooms, penny slots with higher payouts and $1 table games.
Turns out, I’m not the only that feels A.C. is in trouble. Wall Street investors are avoiding casino bonds because they believe there is a glut of casinos, and the opening of the Revel will hurt other Atlantic City casinos. In fact, investors walked away from the Revel when it was being built. It needed a state bailout from Gov. Christie to finish being built.
That’s a good indication the private market knows something Christie doesn’t. Then again Christie is playing with taxpayers’ money. It’s easier to make risky bets with other people’s money.
Tags: Atlantic City, bailout, Beyonce, casino, Gov. Christie, Revel, Wall Street
Casinos are a bad insidious business, but at least the Revel casino in Atlantic City plans to do one thing right. The casino is prohibiting smoking on its property, except for one little outdoor space.
That’s good news for workers and gamblers who would otherwise have to breath in the secondhand smoke, which is a real health hazard at other casinos as this CDC report found as did this study. In Nevada, chronic obstructive pulmonary disease kills at a higher rate than other states, according to the American Lung Association. That is a medical cost that impacts non-smokers and non-gamblers who end up paying for those treatment costs.
Casinos in Atlantic City, and most other gambling outposts, work hard to make sure lawmakers exempt them from any smoking bans. That’s because casinos appeal to addictive personalities. And the last thing casinos want is for gamblers to take a smoke break outside, tally up their losses, and not come back. So kudos to the Revel for creating a smoke-free environment. Hopefully that smart policy will put pressure on other casinos to do the same thing.
Tags: Atlantic City, casino, health hazard, Revel, secondhand smoke, smoking ban
The insatiable drive for tax revenue is one of the main reasons many states are turning to casinos as a way to fill government coffers. But once the casinos begin to struggle they immediately turn to lawmakers for help.
In West Virginia, the city council in Longview just approved a one-year tax break in an effort to keep the struggling casino afloat. Once the tax revenue goes away, what is the point of having a casino if all it does is create economic and social costs?The troubles in Longview offer a window into what other towns and cities can expect as more casinos open and the competition for limited gambling dollars increases.
Consider: The two mega casinos on Indian reservations in Connecticut are scrambling to refinance crushing debt loads, and will soon face increased competition from Massachusetts and possibly New York. Several casinos in Atlantic City filed for bankruptcy in recent years and continue to struggle, in part from increased competition in Pennsylvania. Meanwhile, the Revel casino needed a state bailout in order to resume construction.
Casinos in Indiana, Mississippi and other states are also experiencing a drop in revenues, in part from the sluggish economy and increased competition. In Delaware, the governor has ditched a plan to add more casinos as the existing casinos lobby state lawmakers to reduce their tax rate.
Meanwhile, other states like Ohio, Kentucky and Florida have or are considering legalizing commercial casinos, which will further increase competition. As the casino cancer spreads, look for more states to cut taxes and cut back on regulation – as New Jersey has done – in an effort to prop up the increasingly influential casino industry.
The Longview casino claims it has not made a profit since 2008. Meanwhile, the casino continues to strip wealth from the community. And now the government is extending the casino a tax break so it can continue to take money from residents. There is something seriously wrong with that picture. It shows why casinos are such a bad public policy that is insidious and unsustainable.
Tags: Atlantic City, bad public policy, bailout, bankruptcy, casinos, Delaware, Florida, gambling, Gov. Christie, Kentucky, Longview, Massachusetts, New York, Ohio, Revel, tax break, West Virginia
The New York Times details the latest attempt to save Atlantic City: a new casino that Gov. Christie helped build thanks to $261 million in state tax credits.
The state bailout of the $2.4 billion Revel casino came after private investors walked away from the half-built project. As Atlantic City’s gambling fortunes continued to decline, Morgan Stanley had decided to walk away and a $1.4 billion loss rather than keep plowing money into the casino. Then Christie stepped in with the state bailout.
To recap: New Jersey legalized casinos three decades ago to generate tax revenue and to save Atlantic City. Now the state has decided to plow hundreds of millions of dollars into a private business in order to prop up its struggling gambling industry. Oh yeah, and more than 30 years later, Atlantic City remains mostly a dump.
Now the state is throwing more good money after bad. This, in a nutshell, demonstrates the failed policies of casino gambling.
“There was a reason that the private sector wasn’t stepping up. If they believed there was an opportunity to make money, they would have funded this.” Deborah Howlett, the president f New Jersey Policy Perspective, an advocacy group that opposes state financing told The Times.
This sad story gets worse (as detailed in a blog post last month). The other big reason states tout casinos is for the jobs they create. Indeed, the Revel project is expected to create 2,600 construction jobs and 5,500 permanent jobs. But here’s the catch as detailed in The Times: “Many of the jobs, however, particularly positions like dealers, waiters and cocktail waitresses, will have four- to six-year terms, requiring employees reapply for their own jobs at the end of the term. No other casino has a similar hiring policy, according to Local 54, the union that represents Atlantic City hospitality workers.
“These are the jobs you’re creating?” said Mr. C. Robert McDevitt, president of Local 54. “People aren’t able to plan their future in four-year bites. It’s just unconscionable.”
Tags: Atlantic City, bailout, casino, Gov. Christie, Morgan Stanley, Revel
We did a post yesterday about the low pay for many of the casino jobs that elected officials like to tout as a reason to legalize gambling. But then along comes a report in The Press of Atlantic City today that says the new Revel casino wants to limit the number of years people can work jobs as card dealers and wait staff.
The casino – which received a huge taxpayer bailout from Gov. Christie – is telling workers they can only stay in the job for a few years. Essentially, Revel is placing term limits on the jobs. Of course, the unstated reason behind the move is to keep down costs and ensure a steady flow of new, young employees to fill the jobs. Younger bodies tend to look better in the skimpy costumes that many female cocktail waitresses and blackjack dealers are forced to wear.
Indeed, nine waitresses sued the Resorts casino in Atlantic City earlier this year for age discrimination, alleging they were fired because they couldn’t fit in the new flapper costumes.
At Revel, the unions are balking and arguing the provision is a form of age discrimination. It’s also another example of how the casino jobs are not all they are cracked up to be. Indeed, many of the casino salaries of around $30,000 are not enough to raise a family, so are hardly worth the economic or social problems that come with gambling.
Tags: Atlantic City, bailout, casino, discrimination, Gov. Christie, jobs, lawsuit, Resorts, Revel