Atlantic City, once called Absegami, inhabited by Indians, high sand dunes and black snakes, has had its ups and downs. Now it is a casino town suffering the slings and arrows of an over-saturated northeast gaming market (See Part I) and facing the likely closure of three more casinos with over 6,000 employees to be let go within four weeks.
SNAPSHOTS OF PEOPLE AND PLACES
Beginning at the southern-most casino on the boardwalk Saturday I passed the Atlantic Club which closed in January, terminated about 2,000 jobs, and left the area around it emptier and quieter with less business for the shops. Caesars purchased the property to reduce local competition, with the plan that it would not be used as a casino.
Moving north, next is the Tropicana, purchased cheaply by Carl Icahn with no debt and operating successfully through a good mix of services for the wealthy and not so wealthy and the older and younger clients. It also gets healthy income from its non-casino shops, entertainment and other services.
Next comes Trump Plaza which plans to close in a few weeks and let go 1,000 employees. Along the side of the casino where workers come out to take a break, I talked with a number of them. A man in a suit (a sign he is on a salary, whereas others typically are hourly workers) said he was going to be transferred to the Trump Taj Mahal. A kitchen employee said there would be too many people chasing the same jobs so he was going to leave the area. A cocktail waitress, who gets no severance, said she had worked there 25 years, has two children and a small 401 (k) plan. She will wait a while and see if she can find a job. A bar tender who has been there over ten years says AC has to be more family-friendly and offer young people more nightlife (dance clubs with DJ’s.) He adds that the tips are good in season, but he is going to Florida where he thinks he has better prospects. A waiter says 95% of the employees are totally dependent on their wages and will have a tough time getting re-employed. A chef in his top hat with a wife and three kids thinks he will find a job if not in AC then in a casino in a neighboring state. A restaurant supervisor has a wife and a mortgage and is not optimistic, but will try first to find local work. These employees are not overtly angry but rather resigned to what is about to happen, with a feeling that they are not being treated fairly.
More snapshots below the fold
Entering Trump Plaza (no longer fully owned by his Highness) from the boardwalk, the escalator up to the casino area is not working (a bad sign), the shops are offering deep discounts, and the VIP registration area is closed. Two guys from Boston who came for a bachelors’ party paid $300 a night for a “dirty room, urine smell in the lobby, no room service and frumpy staff.” They partied at Revel and Borgata.
Moving north on the boardwalk I met a handyman and his cat Sponge Bob, waiting in front of a psychic reader shop to install a new mirror. He aptly said AC “is swallowing itself” (like bigger casinos killing off smaller ones). He expects a decrease in work but says the shops always need a handyman. He believes the phone will continue ringing. Like everyone I talked to, he expressed sympathy for the soon-to-be unemployed, and had little hope for any quick recovery. He said “AC can’t lose 8,000 jobs [including Atlantic Club] without a lot of pain.”
Further north are Bally’s and Caesars – big names in the gambling world – and doing OK. Between their locations and the downtown convention center there is a higher-end shopping corridor which make the area more attractive and prosperous.
Resorts, the oldest boardwalk casino, is having a tougher time (next to last in July revenue) and is rumored to close within twelve months.
Next is Showboat, which is scheduled to close at the end of this month and lay off 2,100 employees. It is also owned by Caesars, and like the three closing casinos has reported a sharp decline in revenue.
The last casino on the boardwalk is modern, airy and opulent, with lots of glass and a design similar to mixing up versions of the Guggenheim Museum, pools on two levels, topped off with a huge golf ball above the roof. It appears many of its planned shops are closed or never opened. This beautiful $2.4 billion extravaganza is known as Revel. Its plan was to cater to the very wealthy but with some 1,400 rooms and expensive maintenance it has not been able to meet its monthly break even point in the past year and is about to close with some 3,100 employees to be terminated. Morgan Stanley bet on its success but had to write off $1.4 billion. Gov. Christie also bet on its success, and that worked out poorly.
I didn’t visit the three casinos in the Marina area. Borgata is doing the best of all AC casinos ($304 million year to date) catering to the affluent of all ages. Harrahs, another big name in the gambling world, is ranked second in revenue. Golden Nugget does a good job of managing its costs and succeeds with the midlevel gamblers. These three are probably survivors.
A final snapshot: Sunday morning at 7:00am a retired gentleman on Pacific Avenue near the Tropicana is trying to figureout how to explain to his wife that he lost $700 in a casino last night. He had worked in construction and helped build the first casino in 1978. He recalls the confidence and optimism of that period. Pacific Avenue became a well maintained street. Now more than 30 years later Pacific and the next avenue Atlantic are not so well off. One or two blocks further west there is abject poverty, unemployment, crime and drugs. For these people, “The casinos did nothing. The new mayor can’t make their life any better. I feel sorry for those losing their jobs. A few may find work, but for most it’s a long unemployment.”
It’s not a pretty picture particularly for the poor and disadvantaged in a city with an unemployment rate (11.8%) near double NJ’s rate (6.6%) and with sharply dwindling casino tax revenues to meet its needs. There is also a scenario of possible gaming in northern New Jersey which these people feel will be the final nail in AC’s coffin, even though its success up north might be short-lived. People do have ideas that can help AC, but it will take plenty of time, money and effort. More in Part III of this series.