Last week, the Trump Taj Mahal closed its doors. That’s one less casino on the Boardwalk, one more light dimmed in the city that, 40 years ago, might have knocked Las Vegas off the map as a casino center.
Even without the current Republican presidential candidate’s name on the building’s crest, the Taj is as perfect a symbol of Atlantic City’s quick decline as can be imagined. Opened in 1990 as the city’s largest, it kept its place on top of the casino win pile until the 2003 opening of the Borgata. The stilled casino’s minarets and gilded domes now give the sense of a dying empire.
It is a stark decline. Since 2006, six Atlantic City casinos have closed. But that’s not the whole story of Atlantic City’s casino woes. Add in the Claridge, which opened as a casino hotel in 1981, was incorporated into Bally’s Atlantic City in 2002, and has since been stripped of its casino, sold and reopened as a nongaming hotel. The former Playboy/Atlantis/Trump Regency/Trump’s World Fair was closed in 1999 and demolished in 2000, and eight out of the 15 casinos that have opened in Atlantic City are gone. That is an unprecedented collapse for an industry once proclaimed as the city’s savior.
Only one property, the Sands, was imploded for a newer, better casino, as has been custom in Las Vegas. But due to declining prospects, the Sands’ replacement failed to materialize. Four of them, including the Taj, had their employees dismissed and doors locked because there was simply no way to keep them open—the money wasn’t there. Caesars Entertainment reportedly closed its still-profitable Showboat casino in order to improve margins at its three remaining properties.
What went wrong?
Simply put, those building casinos in Atlantic City banked on an improbability—other states continuing to refuse to legalize gambling even as New Jersey was thriving thanks to a regional monopoly. Clear-sighted observers, going back to then-governor Brendan Byrne in 1977, understood that Atlantic City had only a small window of gambling exclusivity. Instead of anticipating that window’s closure, casino operators, labor leaders and politicians mostly refused to confront the possibility. Over the past 15 years, as competition has become acute, only a handful of properties have committed to the substantial capital investment needed to remain competitive. Those that closed—with one major exception, Revel—did not make those investments.
There were plenty of bad decisions, too. Where to start? Burdensome regulations clipped the industry’s growth even in its best years and drove operators like Steve Wynn from the city. Failing to legalize sports betting in the early 1990s, before the Professional and Amateur Sports Protection Act barred it, was another entirely self-inflicted wound. Legal challenges to Wynn’s late 1990s return to the city denied it not only a world-class resort, but a heavily invested innovator who could have helped it better face the crises of the 2000s. In general, focusing too narrowly on immediate benefits and failing to take intelligent risks sealed the fate of Atlantic City’s casino industry.
There is plenty of significance for Las Vegas in Atlantic City’s decline. It, too, has faced mounting competition, but a substantial commitment to both nongaming attractions and marketing has not only kept the city relevant in a post-monopoly era, but actually boosted its appeal. The continuing growth of Las Vegas was never guaranteed or inevitable.
For other cities and tribal lands tethered to casino development, Atlantic City’s fate is a reminder that, in a hypercompetitive American gambling market, the house does not always win. Casinos can create jobs and bring in revenues, but they are not a long-term guarantee of prosperity, particularly in the absence of other attractions.
Just as Las Vegas shows the upper bounds of a casino-centric tourism strategy, Atlantic City shows its lower bounds. Most cities with casinos likely have experiences somewhere in between these two extremes. That’s no consolation to Atlantic City, of course, but it may help other cities as they negotiate the ups and downs of casino legalization, growth and decline.
Barring major social and political realignments in the United States, Atlantic City will never again be a major casino destination. So the city has the chance to pioneer once again. Forty years ago, it showed the rest of the country that a casino gaming industry could be conducted in close proximity to major population centers. Now it has the chance to show that there can be life after casinos.
That’s a dubious honor to claim, not doubt, but at this point, there are few other options.
David G. Schwartz is the director of UNLV’s Center for Gaming Research.