Atlantic City's Ongoing Gambling Woes Get Worse

The Collapse of the City's Casino Market Continues as the Revel Becomes the Fourth to Close this Year

Revel Casino, Atlantic City, NJ

Barely more than a month ago I published a detailed piece on the Mid-Atlantic's lucrative casino market, and how new properties in Pennsylvania and Maryland were putting some serious pressure on the long-established hub market in Atlantic City, NJ. Well, it turns out that my ominous assessment of the situation in Atlantic City was astonishingly accurate (or even understated). In the short time since I published my post, three more casinos in Atlantic City have announced that they will close permanently by the end of the year. This is in addition to the closure of the Atlantic Club earlier in the year.

The most recent closing announcement is almost certainly the most tragic, but not all that surprising. Yesterday, the owner of Revel announced that the casino would close no later than Sept. 10 of this year. The fact that the casino (which was in its 2nd bankruptcy at the time of my June post) has only been open for hardly two years and cost around $2.4 billion to construct just makes its closure all the more shocking. It's hard to imagine a more colossal waste of investment.

In addition to the Revel, Showboat Casino (opened 1987) and Trump Plaza (opened 1984) will also be closing within a month. The Atlantic Club (opened 1980) was shuttered in January. Currently, these are the only closings planned, but it wouldn't be surprising if they aren't the last. Of course, it's extremely unlikely that all of the city's casinos will close, but to cope with the increasing demand the market will need to "right size" by lowering gaming/hotel room supply to match the lower demand at a new equilibrium. There's no telling how long that will take, especially since there are still casinos in Maryland and Pennsylvania, (and now New York) that have yet to open.

The Mid-Atlantic's Casinos

The Gold Rush to Build New Casinos in the Region Continues to Gain Momentum 

Future MGM National Harbor
National Harbor, MD
Photo Credit: MGM

Until about 20 years ago, the only casino gambling options available to residents of the Mid-Atlantic were located in Atlantic City, New Jersey. Today, while other regions still only have legalized casino gambling concentrated in select few jurisdictions (particularly in the South and West), every state in the Mid-Atlantic region has legalized at least some form of (strictly) regulated commercial gambling and has at minimum solicited bids for the construction of multiple casinos.

Casinos in the Mid-Atlantic: The Numbers
Number of: Delaware Maryland New Jersey New York Pennsylvania West Virginia Casinos 3 6* 11 9 13* 5    - Commercial 0 3 0 0 4 0    - Racinos 3 1 0 9 6 4    - Resort 0 2 11 0 3 1 Slot Machines/VLTs 7,000 12,893 24,368 15,779 27,250 8,020 Table Games 172 402 1,540 0 785 228 Hotel Rooms 500 500 17,638 573 1,378 1,520

*Includes one casino to be constructed in the near future

Resorts International Atlantic City: the East Coast's first casino
Atlantic City, NJ

History of Mid-Atlantic Casinos
Casino gambling first arrived in the Mid-Atlantic in 1978 in Atlantic City. ("Gambling halls" with slot machines did exist previously however in Charles County, MD from 1949 until they were outlawed in 1968). Between the end of World War II and the 1970's, the previously well-regarded resort city had entered into a steep decline, becoming plagued crime, poverty, and corruption. In an effort to revitalize the city, in 1976 New Jersey voters approved casino gambling for Atlantic City. Immediately after the legislation passed, the owners of the Chalfonte-Haddon Hall Hotel began converting it into the Resorts International. It was the first legal casino in the eastern United States when it opened on May 26, 1978 and still exists among 10 other casinos currently operating in the city.

While Atlantic City never reached the success of Las Vegas--the so-called "Entertainment Capital of the World"-- the city's casinos helped the city regain its status as a desirable resort destination, one of the most popular in the nation by the end of the 1980's. 
The success didn't last long though. WIth the advent of two Native American casinos in Connecticut and the era of "mega resorts" in Las Vegas in the 1990's, tourism in Atlantic City began a period of decline that continues to this day. The arrival of casino gambling in neighboring states has significantly compounded the problem and will likely continue to do so into the future.

Aerial view of Hollywood Casino at Charles Town Races
Charles Town, WV

Casino Gambling Expands Beyond Atlantic City
Atlantic City's first wave of regional competition appeared in 1994 when both Delaware and West Virginia legalized gambling at "racinos"--combined horse (and dog) racetracks and casinos. Two years earlier, in New England, Rhode Island had also legalized racinos. Racinos proved to be very successful, particularly in West Virginia, and helped revitalize run-down racetracks as well as provide an overall boost to the horseracing industry. Legalization of racinos soon spread across the country, as far away as New Mexico, and are now legal in a total 12 states. New York, one of the most recent states to authorize racinos, legalized them in October 2001, and there are now 9 located throughout the state, including two located in or near New York City: Empire City Casino at Yonkers Raceway and Resorts World Casino New York at Aqueduct Racetrack. The opening of the New York  casinos further added to the misfortunes of the Atlantic City casinos.

SugarHouse Casino
Philadelphia, PA

Later in the decade, the legislatures of Maryland and Pennsylvania (the last two commercial gambling holdouts in the Mid-Atlantic) both passed measures to legalize casino gambling in 2008 and 2004 respectively. Unlike the other states of the region (except New Jersey), both states went a step further than racinos by legalizing a limited number of stand-alone casinos with strict restrictions attached. In addition to seven racino licenses, Pennsylvania made five licenses available stand-alone casinos (two in Philadelphia, one in Pittsburgh, and two at-large), and additional two to existing hotel resorts. Maryland passed similar legislation (ratified by voters in a 2008 referendum) which allowed the construction of five casinos in four counties and Baltimore city geographically dispersed throughout the state. Two of these casinos were built as racinos at existing horse tracks.

Horseshoe Casino Baltimore (opening fall 2014)
Baltimore, MD

Custom Google Map with location, pictures, and critical info of every casino in the Mid-Atlantic:

(Tip: Press the box above the map in the top right corner for a better view)

2013 Spotlight on Prince George's County: Maryland county secures promising future

Rendering of initial vision for MD Housing Dept headquarters
New Carrollton, MD
Photo courtesy: WTOP

Despite it's large population and numerous important institutions (NASA-Goddard, IRS, Census Bureau, Joint Base Andrews, University of Maryland, etc.), Prince George's County, which shares nearly its entire western border with DC, has been struggling to keep pace with other Beltway counties in attracting high-paying jobs and high-quality retail/residential/commercial development. This is probably mostly due to the persistent negative image the county has had because of its relatively high crime rates (despite serious crime being concentrated mainly in small pockets inside the Beltway and decreasing year over year) and schools that are perceived to be of lower quality than those in other suburban jurisdictions. 

That said, 2013 brought some very welcome news for the county in terms of its economic prospects, and the year was no doubt an unqualified success for County Executive Rushern Baker. A number of projects were announced this year that would bring hundreds of millions of dollars in economic activity, as well over 20,000 jobs to the county over the next few years: