It is ironic that Atlantic City, once a bustling seaside resort, home to the Miss America Pageant and the inspiration for the iconic “Monopoly” game, finds itself in the economic doldrums today. Such an unprecedented economic catastrophe was unimaginable just a few years back.

Economic Overview of Atlantic City

Atlantic City made history thirty-six years ago when it opened the first legal casinos in the United States outside of Las Vegas. It is considered the gambling capital of the East Coast, and its economy is primarily driven by tourism and gambling revenues, which used to provide employment to nearly 30,000 people. However, the sub-prime crisis in the mid-2000s that led to the ensuing global economic recession and pressure from competition have had a disastrous impact on Atlantic City's casino revenues. As a result, a number of iconic casinos have closed and previously steady growth has stagnated. The fallout has been so drastic that Moody’s downgraded Atlantic City’s municipal bonds to junk status in June of 2014.

New Jersey Casino Gambling Fact Sheet 

New Jersey is home to many major casino brands. The casino industry formerly generated $2.80 billion in gaming revenue and more than $200 million in gaming tax revenue. After a state-wide referendum allowing for legalization of casino gambling, the first New Jersey casino opened in Atlantic City in 1978. Since then the state has attracted more than 27 million visitors a year. Combined casino employee wages are more than $900 million, which highlights the importance of gambling to the state's economy. (To learn more about the gambling industry in the U.S., see: The Evolution Of The Gaming Market.)

What went wrong?

  • Too Much Competition 

The boom in the sea-side gambling industry led to a proliferation of casinos in Atlantic City as well as in the nearby states of Pennsylvania, New York, Delaware and Maryland. Slot machines generally account for 85% to 90% of casino revenues and are easily replicable. Customers in eastern Pennsylvania now have a choice of the same slot machines in the gambling halls of Philadelphia, Bethlehem, Chester or Valley Forge. This has led to saturation in the regional gambling market, which has grown less than 1% since 2001. With so many choices at hand, gamblers found themselves in a comfortable position and started preferring casinos closer to home than traveling all the way to Atlantic City.

  • Failure to Reinvent Itself

Instead of exploiting its seaside potential and reinventing itself as a tourist destination, Atlantic City became overly reliant on gambling revenues to sustain its economy. Thus now, when there is an overall slowdown in the industry, the city is experiencing economic difficulties. While competing cities diversified their entertainment offerings from country music concerts to conventions and musicals, Atlantic City continued to focus solely on gambling to sustain its economy.

  • Failure to Sell the Atlantic City Brand

Atlantic city is known by few outside the U.S. Failure to successfully brand itself as Las Vegas has done, has kept international tourism away from this beautiful seaport. While Vegas signifies parties, adventure, extravagance, signature restaurants and luxury to tourists, Atlantic city is known primarily for dedicated gamblers. 

The Bottom Line

Amidst its slowdown, it would be premature to completely write-off Atlantic City’s gambling market. Even if the market stands at $2 billion a few years down the line, it would still be the third biggest gambling market in the U.S. A major restructure for Atlantic city might be under way, causing a negative impact across Atlantic City's labor market.  With any large-scale change there is a chance of financial turmoil in the short term. On the other hand, restructuring could lead to long-term, sustainable economic stability for Atlantic City.

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