Atlantic City's Casino Problem

by | September 22, 2014

By Kevin G. Hall

Sakia Hall lost her $9-an-hour overnight housekeeping job at the Revel hotel and casino weeks ago, but she still cries about it. The single mother of a 12-year-old who also cares for a grown cousin is one of about 8,000 workers laid off here this year.

Forget about another casino job. Four casinos have closed this year in this New Jersey beach town and another may not be far behind. Hall, 33, was "working poor." Now she's just flat-out desperate and poor in a city whose 12 percent jobless rate was about twice the national average even before the mass layoffs.

"It's already hard if you are working for $9 an hour to pay $1,150 rent, and electric bills and stuff like that," said Hall, who works two and sometimes three jobs to survive. "After six months, if you haven't found a job, you're out of luck, you're homeless. A lot of people's parents is losing their jobs."

Hall is a face behind the implosion of this famed gambling city, and the plight of thousands like her offers a cautionary tale for states across the nation debating casino gaming or having recently authorized it.

Maryland, Pennsylvania, West Virginia, New York, Ohio and Massachusetts have all added or are adding casinos, even as iconic Atlantic City casinos shrank toward this year's wave of bankruptcies.

Atlantic City's problems matter because its history is woven into our national fabric. In was known as America's Playground in the 1930s. The Miss America Pageant began there in 1940. The popular board game Monopoly, originally a tool to teach economics, is set in Atlantic City with its famous street names such as Atlantic Avenue.

More recently, the hit HBO show "Boardwalk Empire," in its fifth and final season, depicts the grit of the storied New Jersey shore community, through the tale of a prohibition-era, pre-casino mob boss.

Casinos opened in Atlantic City in 1977 to predictions of coming wealth and jobs. Yet the city ranks near the bottom of virtually every social and economic indicator and now faces a threat to its national relevance.

"When you bet the whole farm on gambling ... it's not an industry that grows the economy. It's an industry that sucks money out of the economy," said Paul Davies, a senior fellow for the New York-based Institute for Family Values, a nongovernment organization that opposes closing state budget shortfalls with gambling revenue. "It's sort of like a roach motel _ takes your money and sends you on your way."

Thirty-seven years after the inception of casino gambling, Atlantic City has become synonymous with economic and political rot.

"Casino living was easy. They paid the taxes, they created the jobs. . . . What else does a guy want?" Mayor Don Guardian said during an interview atop City Hall. "We fell asleep. We stopped marketing ourselves. . . . If our brand got burned around the edges, we need to polish it. We got rusty."

That's frank talk from a man who just took office in January, the month the casino collapse began.

"When I came in, I talked about being here to transition the city, not knowing that any casinos were going to close _ suspecting that we might lose either Trump Plaza or Atlantic Club in 2015 or 2016," he said. "Certainly not this year, and certainly not the other" casinos.

An estimated 8,000 people working in Atlantic City have lost their jobs at the four casinos that closed: the Atlantic Club, the Showboat, Revel and on Tuesday the Trump Plaza Hotel & Casino. To make matters worse, owners of the Trump Taj Mahal, who also closed the Trump Plaza, have said they may close the Taj in November.

"It's just going to be more grim. I don't see any way out of this situation," said Shohini Chowdury, an economist with Moody's Analytics in West Chester, Pa., who expects the city's municipal bonds, already considered to be high-risk junk bonds by several ratings agencies, to be further downgraded. "It's just really bad."

One symbol of rot is the stark contrast of severe poverty within blocks of the lavish hotels with casinos. Rundown homes in drug-plagued neighborhoods are a stone's throw from the $2.1 billion glass-and-glitz Revel, which opened in April 2012 and closed early this month.

"Of all the places that I've traveled in the world, and casinos, nothing has ever been like Revel, it was the biggest heartbreak of my life," said Jeffrey Ortiz, a gambler from Dover, Del., who, accompanied by his wife, Philomena, walked the boardwalk at night in a spiffy powder-blue suit and shiny white shoes that recall a past era. "I've never seen a hotel like that, ever."

Ortiz has come to Atlantic City to gamble for years, fell in love with Revel and like many seemed to accept the nearby blight as just part of the scenery.

"In Atlantic City, there will always be this side and the other side of Pacific Avenue," Ortiz said. "That's inevitable. It's a fact of life." It wasn't supposed to be, though.

Casino gambling was supposed to bring jobs and prosperity to both sides of Pacific Avenue. But on the "other side" of the street, poor residents, mostly African-American, stare nightly at the sparkle and opulence of lit-up casinos. To many of them, the wave of casino closings brings to mind another storied American city in ruin.

"It looks like it's turning into the next Detroit," said Brandon Charleston, 34, slumped on wooden steps that led to the upper floor of a rundown two-story building in the shadows of the Revel and the Trump Taj Mahal. "That's what losing casinos in Atlantic City is. It's basically bankrupted our city."

Fernando Mangual, 38, sips an after-work beer from a brown bag along a tattered bulkhead that once was part of Atlantic City's boardwalk. He works, for now, at a company that supplies local hotels, and his meager earnings help him split a $750 monthly rent with his stepfather. He fears social unrest is coming. He wants to move back to Texas but must wait for his daughter to graduate from high school next spring.

"I think a lot of people are thinking, 'Sell drugs.' That is the wrong choice, I think, for me," he said. "They need money to live and pay bills. I think about me, I'll move on."

One of the few nice homes in the poor neighborhood belongs to Tony Dabney, 54, a lifelong Atlantic City resident. He lost his information technology job at Trump Marina four years ago when it fell on hard times and was sold, but he landed similar work with the city government. He knows that the plunge in casino revenue may soon mean mass layoffs of government employees.

"They've raised my taxes. Now they are talking about layoffs. Everybody is afraid. The police, the fire department. Nobody's safe," said Dabney, blaming city and state officials for not diversifying beyond gambling and criticizing Gov. Chris Christie. "He's at every other shore town in Jersey but he's never come here."

Christie actually has come to Atlantic City, but not for the high-profile town meetings and neighborhood walks like he's done in other shore towns hurt by the devastating 2012 Hurricane Sandy.

Christie held a private business summit in Atlantic City last week, with city officials, union leaders and casino owners asking for a plan of action in October.

"There was a real sense of urgency about making decisions. People are engaged in this seriously," said Bob McDevitt, president of UNITE-HERE Local 54, the largest union for casino workers in Atlantic City. "People in the room were high enough on the food chain that everyone in the room could make a decision for the people they represent. ... That's the first time I know of that that's actually happened."

Left out of the talks, however, were community leaders such as Pastor Collins A. Days Sr., who leads the Second Baptist Church a few blocks from City Hall.

"You've got a poor community, a marginal community. When this happens, no one is concerned about the community itself," said Days, who is working on a number of initiatives to pitch at Christie for noncasino business in Atlantic City.

Community activist Kaleem Shabazz grew up in Atlantic City and doesn't remember a worse local economy.

"I don't think there's been this kind of unemployment or economic weakness since before gambling," said Shabazz, president of Masjid Muhammad, South Jersey's oldest Islamic institution. "Tourism always drove it. . . . You had four months to hurry and eight months to worry." Shabazz was disappointed at the lack of outreach from elected leaders as casinos closed in domino fashion this year.

"We're at a very critical turning point for Atlantic City. Either we are going to get more inclusive in decision-making ... or we're not going to make it as a viable city," he said.

(c)2014 McClatchy Washington Bureau