MEDILL NEWS SERVICE
Atlantic City Begins to See Gambling Payoff After 25 Years of Ups and Downs
By MATT LEON and MICHAEL B. FARRELL
MEDILL NEWS SERVICE

ATLANTIC CITY, N.J. - Gambling arrived here 25 years ago as a panacea for a down-and-out seaside resort town struggling to revive its convention and tourism industry.

Voters bought into the idea that by opening the door to the croupiers and moneymen from Las Vegas, the city's skyrocketing unemployment would be cured by the gamblers who would flock to Atlantic City and leave their money behind.

But for years gambling had not made good on its promise, even though the casino industry thrived.

Besides the loss of local eateries and taverns, much of the 2,500-acre strip of Jersey shoreline has remained largely unchanged outside the shadow of the glitzy casino towers. When casinos opened, there were 311 taverns and restaurants in Atlantic City, but by 1996 there were only 66, according to the 1999 National Gambling Impact Study Commission.

Although money-for-gold pawnshops, strip clubs and boarded-up buildings still fill many of the city blocks in between the flashy casino towers, the chance voters took in 1976 to allow gambling is finally beginning to pay off.

Recently, MGM/Mirage and Boyd Gaming thought the climate fertile for casino expansion, and the city's 13th casino, the $1.1 billion Borgata, opened its doors in early July. Many are betting that it will dramatically expand the market and bring more lucrative business to Atlantic City, where a large percentage of visitors now arrive in hundreds of buses daily for brief stays.

"We're not there yet, but we're getting there," said James Kennedy, executive director of the Casino Reinvestment Development Authority, a state agency created in 1984 to funnel casino profits into redevelopment projects. The authority collects 1.25 percent of gross casino revenues to fund development projects throughout the state.

"The voters were over-promised and it wasn't the casinos' fault," he said, indicating politicians were to blame.

Frank J. Fahrenkopf Jr., chief executive of the American Gaming Association, said New Jersey made "a big mistake" by not earmarking revenue for Atlantic City after the town was promised tremendous commitments of jobs and taxes when casinos were legalized. In the last 10 years, more scasino earnings are being designated for redevelopment projects in Atlantic City. This is an improvement from the late 70s and early 80s, when no money was set aside for the city itself. As Fahrenkopf said, "anyone who knows state politics knows in New Jersey the counties in northern New Jersey across from New York control the legislature."

The city's casinos bring 33.2 million visitors to town annually. In 2002, gross gaming revenue was $4.36 billion from the 12 casinos' 38,117 slot machines and 1,177 gaming tables. They employ 44,820 people and dump millions back into the state coffers to fund social programs for causes such as the disabled and senior citizens.

Casinos also have invested more than $1 billion in Atlantic City housing, community facilities and retail centers. And now that the casino industry has matured, few in Atlantic City want to imagine what the city would be like minus the Trump, Caesar's or Sands.

In addition to revenues, jobs and investments, the casinos' 13,173 hotel rooms dominate a market that was once dependent on vacationers and weekend conventions.

"Before casino gambling, Atlantic City was struggling economically. The gambling referendum really did save the city," said lifelong resident Charles "Sonny" Ireland, who lives one block from the beach on a street of boarded-up row houses sandwiched by casinos. Across from his house is a parking lot and beyond that an empty lot where a failed Trump casino once stood.

Ireland is also yards from the city's refurbished convention center that is beginning to bring national acts like Cher, Britney Spears and Bruce Springsteen to town.

 "This should be some of the most expensive real estate in the country, and it's actually some of the cheapest," said Ireland, a former Atlantic City Fire Department battalion chief. "This was the bad section of town. You wouldn't want to walk down the street. But it's starting to improve."

The Rev. Tom Grey, founder and executive director of the National Coalition Against Legalized Gambling, said improvements to the city from gambling money are "too little too late."

Casinos in Atlantic City have had 25 years worth of opportunities to fund development projects, he said, adding that instead casinos are being applauded for development projects that improve some spots. Grey, a Methodist pastor and the leading figure in national anti-gambling crusade, said that by now the city should be a "finished product."

"We use Atlantic City as an example where gambling failed to deliver on its promises. It was a slum beside the sea before casinos and now its slum beside the sea with casinos," Grey said.

In terms of crime, the first few years after casinos opened were bad. By 1980, the crime rate had almost tripled, reaching about 300 crimes per 1,000 residents. It was up to 410 by 1990. By 2001 the crime rate had dropped to 165.9 and is currently in its eighth straight year of decline.

"We were busy in the 80s, we were definitely busy," said Atlantic City Police Sgt. Michael Tullio. "So, we took it on the chin for quite a few years, but we have made inroads in that."

Unemployment also has decreased since the introduction of the casinos, but remains high. It was 18.1 percent in 1977. It dropped to a low of 8.0 percent in December 2000, and currently hovers around 12 percent - about twice the statewide rate.

The Borgata Hotel Casino & Spa, a towering gold building at Renaissance Pointe across town from the boardwalk, brought 2,002 more hotel rooms, more than 100 tables and 3,000 slots to town. It's also stocked with almost two-dozen "destination" restaurants and specialty retail shops, as well as the 50,000-square-foot spa, salon and barbershop - the first of its kind in Atlantic City.

Casino industry leaders say the Borgata will help Atlantic City shed its stodgy image as a destination for geriatric gamblers and catapult the city into the realm of Las Vegas.

"This is a competitive business, so Borgata is going to force Atlantic City to change," said Frank Fahrenkopf. "You go to Atlantic City two years from now, you will not recognize the place."

Borgata already is forcing the city's older casinos to renovate, and investment in other noncasino projects like the ballpark and the aquarium is expected to continue. Those with a stake in Atlantic City tourism would like nothing better than to increase the average stay in the city, which according to Fahrenkopf, is only eight hours. By comparison, the average stay in Las Vegas is three days and in Biloxi two days.

To christen the Borgata and mark the 25th anniversary of gambling in Atlantic City, the gaming association held its 15th Annual Hall of Fame induction and charity dinner at the hotel and casino.

It was there that gambling's cheerleaders, like Fahrenkopf and Harrah's International Chairman and CEO Phil Satre, proclaimed that Atlantic City had finally arrived.

Now, even some religious leaders don't want the development to stop. Earlier this year, the Rev. Collins Days of the city's Second Baptist Church organized a rally against a proposed increase in the state casino tax that he feared would inhibit growth.

Days says the city is doing "phenomenally well" in terms of areas of growth, housing and business," but heacknowledges it is not without its share of problems.

"Gambling, alcohol addiction, drug addiction, it's just a part of it, a part of the culture," Days said. "When you look at what happens here, in a city so small, it has to be the casinos that generate that."

But, despite the Borgata, expansion projects at Showboat, Tropicana and Resorts casinos, and plans for a new $60-millon retail center, it may take more than two years to erase the blight of the last half-century.

Outside of casino areas, much of the city is occupied by weedy parking lots, crumbling homes, bodegas and boarded windows.

Amanda Henson, 21, lives in the High Gate Apartments and is still waiting for casino money to revive her neighborhood. Her building is straddled by rundown blocks and U.S. Route 30, and falls within the shadow of the Borgata

"Look at it," she said. "They're building all this new stuff around (public housing). They're trying to push everyone out because this is ëAmerica's Favorite Playground.'" Pointing to a burned-out building, she asserts, "There was a fire over there. Do you think they fixed it?"

The nickname "America's Favorite Playground" - which Atlantic City still uses - is a lagacy of summers in the first half of the 20th century, when thousands of beachgoers from New York and Philadelphia descended upon the city.

Back then work was plentiful in the summer and hard to come by in the winter. Now, jobs are more available year-around, but some residents are barred from casino employment by state-mandated background checks and drug tests for casino jobs, said Richard Perniciaro, associate dean for the Center for Regional and Business Research at Atlantic Cape Community College

"There's a pool of folks out there who are looking for jobs, that I guess you would just call hard-to-employ people," he said.

Nevertheless, Fahrenkopf insists, development spurred by the Borgata and more casino investment in Atlantic City can restore the city to its pinnacle - a beacon of prosperity.

"Is Atlantic City a beautiful place that I'd like to go to and spend a week? No," Fahrenkopf said. "Now, a year from now, it's going to be a different story, a different place."

With the development and fervor in the Borgata's wake, the place may change. But it remains to be seen whether the blocks of blight will remain and if those waiting for gambling's benefits to trickle down will have to keep waiting.

Atlantic City will be judged by the last bad photograph that can be taken there, said the reinvestment authority's Kennedy.

"It's going to be a long time before you can send someone out and not take a bad photograph," he said.

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