Casino gambling in the United States has been a major industry ever since it was first legalized at the local level by the Nevada legislature in 1931. From its earliest days, casino gambling came to dominate the nightlife and reputation of Nevada, with casino towns like Las Vegas and Reno posing as major destinations for people from all across the country. Nevada's reputation for playing host to Sin City was left largely unchallenged for the better part of five decades, until New Jersey tossed its own hat into the ring.
In 1976, voters in New Jersey passed a referendum that made gambling legal in the state's coastal community of Atlantic City. Long a resort town for those in the Philadelphia area, Atlantic City's fortunes were in decline and gambling was viewed as a savior for the city's tax revenue and employment situation. To some extent, that's exactly how things played out for roughly the next three decades. A seismic shift began to happen around the turn of the 21st century, though, which would pose a serious challenge to Atlantic City's position as the "Las Vegas of the East."
In Neighboring Pennsylvania, a Changed Attitude About Gambling
Calls for the legalization of gambling in Pennsylvania date back to at least the earliest days of casino activity in Nevada. For most of this history, though, Pennsylvania was a state that merely operated its own lottery that benefited senior citizens across the commonwealth. Around the turn of the 21st century, attitudes began to change due to shrinking state revenues and exploding budgetary requirements. In 2004, the state legislature legalized casino gambling statewide and created the Pennsylvania Gaming Control Board.
The PGCB was charged with regulating casinos and collecting taxes at each establishment across the state. It was also charged with creating regulations and licensing casinos that may wish to operate in Pennsylvania.
In 2004, it was agreed that 14 casinos would be approved across the state, occupying spots in cities like Pittsburgh, Harrisburg, Scranton, Philadelphia, and Bethlehem. Only slot machines would be permitted under the law, at least until further review of table games was completed. Six years later, in 2010, table games came to Pennsylvania's casinos and things began to change for the United States gambling industry.
The profits reaped by Pennsylvania's fourteen casinos exceeded state estimates and projections for each year since their opening, and blew expectations especially out of the water after the legalization of table games. Atlantic City, meanwhile, was in a decidedly less optimistic position with its western neighbor stealing much of the spotlight.
Atlantic City's Fall From Grace and the Gambling Bronze Medal
Pennsylvania reports its casino revenues on an annual basis at the end of each calendar year. For the 2012 calendar year, those results were issued in the second week of January. The new was pretty big for the state's casinos: In total, the 14 casinos operate statewide brought in an astounding $3.16 billion in total revenue from both slot machines and table games combined. That amount was higher than any other year in the state's history, and was driven both by table games statewide and by excellent revenues at two casinos in the eastern part of the state.
That wasn't the biggest announcement made by state officials, however. Atlantic City's annual report of total revenues had been released just a few days earlier. During the same reporting period, city officials announced revenues of roughly $3 billion and change. For the first time since 1976, the number-two gambling destination in the United States was not Atlantic City, New Jersey. Instead, it was the entire neighboring state of Pennsylvania and its ascendant casinos in virtually every major city statewide.
The End of a Very Long Trend: Atlantic City Revenues on the Decline Since 2006
The best year in Atlantic City's history was 2006, when local officials reported the largest amount of revenue form the city's casinos ever recorded. That was due partly to an excellent national economy, low airfare rates, and the scarcity of full-fledged casinos nationwide. In 2006, far fewer states had legalized any form of casino gambling than currently permit the practice, giving Atlantic City an edge in marketing and tourism that it would soon no longer enjoy. Neighboring Pennsylvania was, at the time, only experimenting with its casino program.
Most of the casinos had not yet been built, and table games were not yet legalized. As those things took shape in 2007 and beyond, Atlantic City's revenues dropped every single year between the end of 2007 and the end of 2012. After a half-decade of decline, the city now finds itself with the bronze medal in terms of total revenue and total foot traffic at its casinos on the boardwalk and by the bay.
Luckily, Atlantic City is Still an Entertainment Destination for Millions
Unlike Pennsylvania's fourteen casinos, the establishments in Atlantic City are not solely dedicated to gambling when it comes to taking in revenue and producing healthy profits. Pennsylvania's casinos are largely "gambling houses" without attached casinos or major performance space. Atlantic City's setup, though, looks a bit more like Vegas. That has helped the city weather the fiercest of storms in recent years as gambling has been legalized from Pennsylvania to Oklahoma and beyond.
Entertainment revenue in Atlantic City for the year that ended on December 31, 2012, was actually up from prior years. A new casino, the Revel, opened in 2012 and was sold more as an entertainment destination than as a place to play slots and table games. Sold to visitors as an upscale experience, it has helped change the conversation about why people travel to Atlantic City and what they do during their time in one of the seaside resort's lavish hotels. Though Pennsylvania is now the second largest gambling destination in the United States, Atlantic City remains a leader in luxurious hotels, world class entertainment, beach resort ambiance, and high-end shopping. That bodes well for the city as it recovers from Hurricane Sandy and re-brands itself as America's oceanfront entertainment town.