Atlantic City Casinos Face Bankruptcy and Even Foreclosure

ATLANTIC CITY — Uncertainty has always been a way of life for casinos who make their money on games of chance. But now, Atlantic City casinos are looking at their own futures with uncertainty.

Donald Trump quit as chairman of the casino company he once ran, and wants his name off the three casinos that have been synonymous with Atlantic City for decades, now that they're in bankruptcy for the third time.

The Tropicana Casino and Resort will file for bankruptcy next month, and Resorts Atlantic City — the first casino in New Jersey — could also become the first to be foreclosed on.

Since gambling was legalized here nearly 31 years ago, never has the country's
second-largest casino market gone through this turbulent a time.

In addition to the economic slump, which leaves people with less money to gamble, Atlantic City's 11 casinos are being battered by fierce competition from slots parlors in Pennsylvania and New York. Those gambling halls are attracting people who recently had no choice but to come here unless they wanted to get on a plane to Las Vegas, or drive to faraway casinos in other states.

"We've never seen it like this," said Linda Kassekert, chairwoman of the New Jersey Casino Control Commission. "This is a global recession, and the impact on discretionary income, you just see it immediately."

Last year, gambling revenue at Atlantic City's casinos fell 7.6 percent. The year before that, it was down 5.7 percent.

This really comes as no shock. The economy sheds 500,000+ jobs a month and retires loose half their retirement savings, they are not going to take there money to Atlantic City to gamble with. Similar downturns have been seen in Las Vegas and the Connecticut casinos (which are also direct competitors for Atlantic City.)

Also, I have been saying for years that Atlantic City has a poor business model. The casinos never invested the kind of money into the surrounding community to make it family friendly. AC is not a vacation destination the way Las Vegas is, but it could be. There is no reason why the surrounding area of AC could not be filled with shopping, amusement parks, restaurants, theaters, etc. Only recently has New Jersey started direct train service from Manhattan to AC. An outlet shopping center recently opened, but more needs to be done.

Another problem is AC hotels themselves. I have always complained that AC hotels try to make their money off of the hotel rooms themselves. AC hotels out price their market for hotel rooms. They never learned that if you save me money on the hotel room I can stay there longer and actually gamble more and spend more money in your restaurants and gift shops. More comps bring back the players quicker and that means more money to the casinos. That leads into my last AC casino gripe, the tables themselves. AC casinos rather have a $25 craps table empty on a Saturday night than lower it to $5 or $10 and have it packed. There are more low-rollers than high-rollers. And recognizing that fact is sure way to raise more money.

The problem is that New Jersey is heavily dependent on the revenues generated by Atlantic City. AC provides jobs, tax revenue, some tourism and is a huge revenue generating stream for the state. If AC fails, NJ tax stream will decrease, thus further hurting the little guy.