Editor’s note: This story reflects the opinion of the author and not PlayNJ nor Catena Media as a whole.
The Atlantic City casino market is not in a great place at the moment, and the reasons why are as varied as they are complicated.
The Atlantic City casino industry faces steep economic challenges, arguably to the point of being unhealthy. And PlayNJ has explained why AC casinos aren’t doing as well as you might think.
The city itself is a mess, saddled with a dysfunctional local government that struggles to get roads paved or keep the streets clean and well-lit. The state of New Jersey, which bills itself as the city’s savior, only sees Atlantic City casinos as a Golden Goose, squeezing out as much as it can while returning as little as possible back to the Jersey Shore. And the Casino Reinvestment Development Authority, tasked with utilizing gambling funds to improve the city, is such an abject disappointment that locals say its acronym actually stands for Can’t Really Do Anything.
The good news is that, despite the best efforts of the aforementioned antagonists to progress, fixing what ails “AyeCee” is actually not that complicated. Besides the arrival of casinos in New York City (which are coming), most of Atlantic City’s problems can be handled right here in the Garden State.
As it currently stands, there are three hurdles Atlantic City must overcome if it wants a viable future, and all of them can be addressed today. They are, in no particular order, the public perception that the city is unsafe, the deteriorating value for visitors and the lack of online gambling tax revenue that makes its way back to AC.
That places the onus on the city, the casinos and the state — the primary stakeholders in the so-far failed experiment of urban renewal through gambling – to make corrections. Here’s how.
Atlantic City needs a visible police department
The easiest issue to address is the well-earned, but widely exaggerated, perception that Atlantic City is unsafe. It is no more dangerous than any other urban environment.
Are there areas of the city tourists should avoid? Of course. But that’s not unique to Atlantic City.
The problem for AC is that the public believes places like the Boardwalk and The Walk are becoming increasingly hazardous. Those concerns are legitimized when visitors come off the Expressway and see obviously intoxicated individuals passed out on street corners, or they have to avoid aggressive panhandlers on the Boardwalk outside the casinos.
The best way to fix a visual problem is with better optics. In this case, that means seeing more of the Atlantic City Police Department.
The pushback is always that the police department needs more manpower. Hiring more officers is part of a long-term solution. But that should only happen if the ACPD can demonstrate its ability to make proper use of its current resources.
Research on the relationship between police presence and crime deterrence “suggests that it is far more important how police are used than how many there are.”
What is needed right now is for the top-heavy ACPD — which has more high-ranking officers than other NJ agencies twice its size — to put more emphasis on visible enforcement.
Atlantic County residents who spend any time on the island know that red lights, stop signs and speed limits in Atlantic City are more like suggestions. Every Shoobie, Benny and first-time visitor with an internet connection knows it as well.
So do the “bad guys” who occasionally make the city appear worse than it actually is by exploiting vulnerabilities in local law enforcement.
ACPD could help itself by doing something tangible to improve the city’s perception.
Atlantic City casinos can reestablish the seaside resort as value destination
Some incredibly intelligent people work at Atlantic City casinos, particularly at the corporate and executive levels. And yet the decision-makers for those casinos are doing one of the most bone-headed things imaginable — insulting their guests.
How do they do this? By nickel-and-diming everyone who walks through their doors at every conceivable turn, from the parking garage to hotel check-in to the casino floor.
Off-season parking fees, resort fees for needless services, early check-in fees for available rooms, $8 coffees and $27 sandwiches, $25 table games minimums on weekdays, $20 pool entrance fees for hotel guests. And on and on and on.
People come to casino resorts with the intention of spending money. Finding new and creative ways to expedite the process is an affront to the customer.
Death by a thousand financial cuts leaves a scar on the minds of visitors. They feel it the next time they are deciding where to spend their money, and they seldom choose to revisit a place that intentionally inflicts economic pain.
Bean counters are destroying the value proposition that once made Atlantic City one of the most sought-after vacation destinations in the United States. It does not take an MBA or decades of gaming industry experience to realize that is a terrible business strategy.
With much of the country battling “sticky inflation” and the industry’s profits lagging, now would be an opportune time to reintroduce Atlantic City as a place where people feel like they get a good bang for their buck.
Hey, casinos. Want to get more people in your buildings? Eliminate parking fees. Chalk it up as a cost of doing business.
Smart money says the first Boardwalk casino to do this will see an immediate increase in both gaming and non-gaming revenue. Bet on it.
Atlantic City needs a cut of NJ online casino revenue
It is no secret that COVID-19 drastically altered gambling markets. In the Garden State, New Jersey online casinos are trending upward while the brick-and-mortar industry in Atlantic City is stagnant.
Industry financial data suggests monthly revenue from internet gaming will exceed AC in-person revenue at some point in 2024. Annual earnings from digital gambling could exceed land-based returns as early as next year.
The ever-widening and deepening pool of online gambling revenue is but a shallow puddle in Atlantic City. For perspective, long-time industry writer and editor-in-chief of the Gaming Law Review Steve Ruddock noted in his April 30 Straight to the Point substack that casinos “will typically get 5%-10% of the revenue share” generated by online casinos, “maybe a bit more in some cases.”
One state lawmaker sees the writing on the wall. Realizing that digital gambling is a better bet than banking on a shrinking land-based market, this legislator is proposing to double the tax rate on online casino revenue.
It is unlikely that anyone outside the gambling industry is going to object to the state increasing its cut of online casino revenue to 30%. The proposal will be viewed favorably in the tax-happy halls of the State House in Trenton.
But what about Atlantic City and the money it derives from an obviously shrinking land-based gambling market?
How much more should casinos get from online gambling?
New Jersey voters authorized casino gaming in the 1970s to revitalize Atlantic City. The entire concept of legal gambling in NJ is designed to benefit Atlantic City, and online casinos should be no different.
Atlantic County’s representatives in the State Legislature need to start negotiating posthaste — yesterday, if possible — for Atlantic City to get its fair share of the tax hike scheme.
AC’s financial well-being is better today than it was 10 years ago, but a consistent revenue source tied to online gambling would certainly be helpful, both now and in the future.
In order to ensure the additional money is not mismanaged at the municipal level, Atlantic County’s state reps should include language stipulating exactly which programs, services or departments receive funding.
South Jersey leaders should be doing everything possible to ensure the fastest-growing and most lucrative form of legal gambling in the state benefits Atlantic City for years to come.
