Especially the casinos. On an inflation-adjusted basis, Atlantic City’s gaming halls cleared at least $1 billion in annual gross profit—not revenue, profit—from 1983 until the turn of the century. “They were built for a different time and a different customer,” says Kevin DeSanctis, the developer behind Revel, “but frankly, they did very, very well in terms of return on investment.” They did indeed. But it’s also the case, after adjusting for inflation, that casino profits were more or less flat between 1989 and the current crisis. Which means that gambling in Atlantic City hasn’t been a growth industry for 22 years.
All the while, Las Vegas was evolving into a dining, shopping and entertainment mecca. Roughly half of casino income in Vegas is earned outside the gambling floor, from rooms, restaurants and the like. In Atlantic City, only 25 percent of the casino take is non-gaming revenue. By 1996, when the massive Mohegan Sun casino opened in Connecticut, it was clear that Atlantic City’s East Coast gambling monopoly was gone for good. “And what did they do to be in a position to stave off some of that competition? They did nothing,” says current Atlantic City mayor Lorenzo T. Langford. “So now the reality is biting them in the ass.”
WHEN YOU TALK TO MOVERS and shakers in Atlantic City, they tell you that the era of self-satisfaction is over, that they understand that the casinos’ survival is riding on their ability both to evolve and to clean up the town where they do business. There are some real reasons to believe that this time they actually mean it, starting with their clear-eyed assessment of the new reality. “The convenience gambling is gone. It just is,” says Don Marrandino, who as eastern division president for Caesars Entertainment runs four Atlantic City casinos. “And we know with competition, we’ll never get back to the 2006 high-water level.”
They aren’t starting completely from scratch. Atlantic City’s casinos began to stir from their lucrative slumber in mid-2003, after the Borgata opened. With its fine dining, half-naked waitresses and Las Vegas-style amenities, the Borgata was a revelation for an industry that until then was sure there was no market in Atlantic City for anything but aging day-trippers and committed gamblers. Since then, the casinos have opened a respectable (if predictable) collection of restaurants, a handful of beach bars, an assortment of highly regarded spas, and ample national retail outlets. More surprising has been the success of the casinos—along with non-gaming destinations like the Chelsea Hotel—in attracting younger visitors, drawn by the city’s active club scene.
But it is nowhere near enough, not yet. The city needs more entertainment, more dining, more beach- and Boardwalk-centered-activities, and more sex appeal. And so the casinos have turned to a new class of bosses—guys like Marrandino—to accelerate the transition.