Another New Jersey Casino Closure: What's Next?
Casino workers at the Trump Plaza in Atlantic City got some bad news this July: Their employer will be closing its business doors in a few months. On September 16, the Trump Entertainment Resorts property, founded by Donald Trump himself, will become the latest in a series of closures in the once-thriving New Jersey city.
In the U.S., businesses are required by federal law to give advanced notice of a mass layoff. The July 14 announcement of the impending closure was the result of that law. Nearly 1,200 people who work at the Trump Plaza will lose their jobs. Former Atlantic City mayor Jim Whelan, who now serves as a state senator, told reporters that he vacillated “back and forth between being depressed and angry” about the announcement.
Indeed, this closure is another huge piece of bad news for the once-sparkling city. At the beginning of 2014, 12 casinos still operated in the gambling mecca. In quick succession, however, the businesses seem to be tumbling to the ground. In January, the Atlantic Club closed. In June, the Showboat Atlantic City Hotel and Casino, owned by Caesars Entertainment, announced its upcoming August closure. Revel, an operating casino that has failed to ever declare a quarterly profit in its short career of two years, is under threat of immediate closure if a buyer doesn't pick up the property at auction this summer. Now, the Trump Plaza has declared its demise.
Atlantic City Bad News Timeline
- January 13, 2014: The Atlantic Club closes abruptly.
- June 19, 2014: Revel Entertainment Group filed for bankruptcy and put its property on the auction block.
- June 27, 2014: Caesars announces its plan to close the Showboat.
- August 31, 2014 (pending): The Showboat will close its doors.
Thousands of Jobs at Risk
The timeline above represents more than just a few unfortunate building closures. It represents the potential loss of 8,000 jobs in Atlantic City. No state can afford higher unemployment right now, but the fact seems inevitable at this point in New Jersey.
Big Picture Affects of Unemployment in Atlantic City
An influx of unemployment in New Jersey will mean a reduced standard of living for all unemployed individuals and their families. Studies show that unemployment threatens both the physical and mental health of those affected. It has also been associated with a shortened lifespan.
Unemployment harms the social well-being of any nation. It has been associated with higher crime rates and a decrease in volunteerism and general good will. When unemployment rates rise, immigration restrictions tend to tighten and the need for government-funded protective services rises.
Unemployment takes its toll on a nation's economy, too. It leads to higher demands on government pocketbooks for protection and aid. In the U.S., state and federal benefits to the unemployed, along with food stamps and an increased need for Medicaid coverage, put demands on a system that is already lacking for funds. Everyone pays taxes to cover unemployment, but business contribute the most. If business taxes are raised to cover increasing unemployment costs, prices are likely to go up, creating a lose-lose situation for everyone.
What Caused the Casino Industry Failure in Atlantic City?
Many people are quick to blame America's suffering economy and recession for Atlantic City's painful decline. Indeed, the town was at its peak in 2006, before the recession kicked in. Since 2006, revenue from the city's casinos has declined by 46 percent, according to investment analyst Peggy Holloway. Holloway believes, however, that the misfortune Atlantic City now faces has less to do with the recession and more to do with other things.
Specifically, Holloway suggests that casino proprietors did not do enough to keep up with the competition. Instead of reinvesting in their buildings, proprietors allowed them to sit, as-is, for too long. In the mean time, gambling became legalized in more of the surrounding states. The influx of gamblers from Pennsylvania, New York, Delaware, and Maryland that Atlantic City once enjoyed has decreased because these states now offer local gambling opportunities. That fact, coupled with rising gas prices, made staying at home to gamble irresistible to many who used to travel to the Garden State for their gambling fix.
The Perks of Visiting Atlantic City
All of this is not to say that Atlantic City isn't a great place visit. It is. Along with its casinos, the town offers a lovely beach, a boardwalk, nice hotels, and shopping opportunities that serve its residents and guests well. This year, the combined revenue of the convention and tourism industries will supply New Jersey's government with $1 billion. That's a significant amount of money, although it still doesn't compare to the $5 billion in revenue the city's casinos once offered up to its government.
Casino Employees Are Still Hopeful
The employees of Atlantic City's still-standing casinos are hopeful that their luck will turn around. Many find it impossible to believe that the town's gorgeous casinos and other amenities will completely fail them. Bob McDevitt, president of the casino workers' union, insists that New Jersey is “just beginning to turn the market around,” and that closing any buildings right now would be a serious mistake. The Showboat, for example, is still turning a profit and could be purchased by another owner, he says. With new management, McDevitt theorizes that the gambling industry in his town should be just fine.
Indeed, it might be. Workers at Revel are undoubtedly going through this thought process every day. If someone would purchase the casino and keep it running, jobs at Revel could be maintained. New managers with fresh ideas might be able to turn the casino's fortune around, saving New Jersey from another wave of layoffs.
Atlantic City began 2014 with 12 operating casinos. By the time the year is through, only 8 may remain. Business in the gambling mecca is nowhere near what it used to be. Increased competition from other states, two of which also offer legalized Internet gambling, has debilitated the area. Interestingly, New Jersey itself is the third state to offer legalized gambling. Hope still remains for brick-and-mortar casinos, however, and leaders like McDevitt look to fresh-faced investors that might breathe life back into the town.