Casino workers fear bleak future

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IOL BR GAMBLING-NEW-JERSEY

Reuters.

A view from the boardwalk of several casinos in Atlantic City, New Jersey. Atlantic City, which once held a lucrative East Coast gambling monopoly, has fallen hard. Gaming revenue has fallen to $2.8 billion, a little more than half its 2006 peak of $5.2bn. Photo: Reuters.

After 19 years working as a cook at Atlantic City’s Showboat Casino, Dave Rose is counting the weeks until he and about 2 000 fellow workers lose their jobs when the casino is shuttered at the end of the summer.

The Showboat will be the second major casino to close in this struggling New Jersey shore city this year, a trend that has some tourism officials talking about revamping the ageing gambling Mecca to broaden its appeal beyond bachelor parties and bus loads of retirees, with more family-friendly attractions.

“They’ve been saying that for 10 years,” said Rose, who held out little hope of that strategy working and feared he would have a hard time finding a job that matches the $18.18 (R194.41) an hour he earns at the Showboat.

“There aren’t too many good-paying jobs out there,” he said.

The unemployment rate in the city stood at 10.3 percent in May, among the highest of any major US metropolitan area and above the national rate, which was at 6.3 percent in May, and has since fallen to 6.1 percent last month.

Atlantic City, which once held a lucrative East Coast gambling monopoly, has fallen hard.

Gaming revenue has fallen to $2.8 billion, a little more than half its 2006 peak of $5.2bn.

The decline reflects the opening of new casinos in the north-eastern US in recent years: New York, Pennsylvania, Delaware, Maryland and Connecticut today all have casinos and Massachusetts is in the process of awarding licences.

One of the main questions for officials and workers in Atlantic City is, after Caesars Entertainment pulls the plug on the Showboat on August 31, how many of the city’s remaining 10 casinos will survive.

The Revel casino and resort, which was a centrepiece of New Jersey governor Chris Christie’s effort to bring Las Vegas-quality gambling to Atlantic City’s declining gaming business when it opened in April 2012, last month filed for bankruptcy for the second time in its short history.

The casino, which employs 3 140 workers and is losing $2 million a week even in the peak summer season, is trying to line up a buyer.

If it doesn’t find one in the next few weeks it plans to close.

Christie had provided a $261m tax package to help build Revel after Morgan Stanley, which had begun building the casino, pulled out of the project two years ago and took a $932m loss.

“We still have five or six relatively successful casinos,” John Palmieri, the executive director of New Jersey’s Casino Reinvestment Development Authority, an economic development agency funded by a tax on casinos, said.

“There were 12. Can we support nine? Will that end up dropping to seven or eight? That’s the big question.”

Losing more casinos could punch a big hole in Atlantic City’s budget, which had historically offered generous contracts to public employees and relied on casinos to provide about 80 percent of its tax revenue, Michael Busler, a professor of finance at Richard Stockton College in Galloway in New Jersey, said.

“We aren’t done dropping yet,” Busler said. “What (the mayor) has to do is get spending way down.”

Atlantic City Mayor Don Guardian took office early this year to discover the city ran a $10m budget deficit last year, a number that is on track to rise without budget action.

Almost one in three city residents live below the poverty line, according to US Census Bureau data, more than triple the poverty rate across New Jersey.

In a teleconference on Thursday to brief the media on the city’s efforts to address changing market conditions, Guardian acknowledged the singular focus on gaming had run its course.

“We put all our eggs in one basket,” the mayor said.

“We know that was foolish.”

He voiced optimism about the resilience of the city. “Atlantic City’s revitalisation will not happen overnight,” he said.

“Time is an essential element.”

But just a block off Atlantic City’s boardwalk, the glitz fades quickly.

Busy commercial strips are filled with payday lenders, liquor stores and other businesses targeting low-income consumers.

The city’s crime rate, six times higher than the state average, prompts many visitors not to wander from their hotels or the boardwalk.

A heavy blow to the city’s reputation came in 2010 when a gambler from north New Jersey was car-jacked inside a casino parking garage, stuffed in his trunk and murdered in a rural area.

“It’s like a ghetto,” said Bob Jeannotte, 70, a visitor from East Brunswick, New Jersey, who sat on the boardwalk in early July while his wife slept late.

“You’d think the casinos would help bring the place up.”

Voters opened the door to casinos in 1976, hoping to revitalise the city’s run-down hotels. While money flowed in, it did little to bring up the rest of Atlantic City, as funds from the taxes casinos paid were spent on projects all over the state, Palmieri said.

State law allows property owners to retroactively appeal over the taxable value of their property and the city’s decline has prompted several casino owners to do so, leaving the city to pay refunds on past taxes.

In June, the owner of the Borgata Casino said it had reached a settlement with the city that would bring it a refund of $88.25m for tax payments made from 2011 through last year.

The city had to borrow $143m in fiscal 2013 to cover the cost of the successful tax appeals by Borgata and others.

For all the troubles, there remains a steadfast group of local business people who believe in Atlantic City’s future.

“This town has amenities that can’t be replicated in any other market,” Anthony Catanoso, who owns the Steel Pier boardwalk amusement park, said.

“We are packed with families every night.“

Tourism officials and civic leaders say the future lies in reinventing itself as a family-friendly resort, an approach that Las Vegas tried in the 1990s.

That Nevada city has since returned to its traditional focus on more hedonistic entertainment is captured in its “What Happens Here, Stays Here” slogan.

Local officials see hope in a newly built outlet mall, a Bass Pro Shop currently under construction, and the construction of a new conference centre at one casino.

One hotel operator, St Petersburg, Florida’s TJM Properties has bought into the idea, acquiring the former Atlantic Club Casino, which closed in January, and the Claridge Hotel, which it plans to develop with a 2 787m2 square metre children’s museum.

“We are going after families,” Sherry Amos, a spokeswoman for the hotel, said.

“We want people to take their families to the outlets, and we want them to take their families to the beach.”

The terms of the sale of the former Atlantic Club prohibit the space from housing a casino in the future.

Atlantic City officials note that even as gambling income has declined, the city’s other revenues have picked up.

Taxes on drinks and tickets to shows hit $35.5m last year, up from $26.2m in 2005.

But those tax receipts are dwarfed by the city’s earnings from taxes on gambling and parking, which came to $214m last year, though that is less than half their level a decade ago.

The developments elsewhere in the region have some long-time Atlantic City workers wondering if they would have better luck moving to chase casino jobs in other places rather than counting on a revival at home.

“If this closes, I’ll have to take my children out of the state,” Mike DeVita, a 52-year-old bartender who has worked at the Showboat for 27 years, said.

“It’s the only trade I know.” – Reuters


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