Why Did Atlantic City Fail? Increased Competition and Failure to Pivot Beyond Casinos
Atlantic City was once the glittering East Coast casino capital, attracting hordes hungry to try their luck at the slots and tables. Yet today, the city is a shell of its former self – a depressed community reliant on an industry in decline. So why did the iconic gambling mecca lose its luster? In essence, external competition and an inability to properly diversify its offerings.
Flags waved as the first casino opened its doors in 1978, symbolizing a new chapter. Legalized gambling had come to revive Atlantic City after years of economic malaise and decay, spearheading its transformation into a globally-renowned tourist haven. For decades, the bets paid off big. Atlantic City enjoyed a monopoly as the sole spot for legal casino gaming outside Nevada. Jobs and tourists flooded in throughout the 80s, 90s and early 2000s. By 2006, its casinos were generating a whopping $5.2 billion in annual gaming revenues.
But Atlantic City‘s heyday ultimately proved short-lived. As neighboring states jumped in to allow their own casinos, the city‘s monopoly disintegrated. From Pennsylvania to New York to Maryland, regional gaming sites began luring customers away with shiny new amenities. Atlantic City never effectively countered the mounting competition by diversifying its own product. Within years, sagging revenues led to shuttered casinos and disappearing jobs. And despite recent comeback attempts, the city has yet to stem the tide and halt its spiral downwards.
Monopoly‘s Over: Competitors Erode Atlantic City‘s Edge
Atlantic City‘s original winning formula was simple. It cornered the regional market as the lone place for legal gambling outside Nevada. With no rivals, it enjoyed an effective East Coast monopoly for decades. But by the early 2000s, that exclusivity vanished for good.
As gambling expansions gained steam across the Northeast, Atlantic City struggled to cling onto customers. In 2006, Pennsylvania opened its first gaming hall – provoking a tsunami of new competition as more casinos followed. From 2006 to 2014, Pennsylvania‘s casino industry exploded from nothing into a $3 billion business. Feeling the pressure, Atlantic City revenues dropped by nearly 30% over the same period.
Next came an assault from the north. In 2017, MGM opened a billion dollar resort in Yonkers, NY – just a stone‘s throw from Atlantic City. The Empire City Casino for years attracted droves of patrons from Northern NJ and NYC, regions once dependent on Atlantic City to get their gaming fix. More casinos in upstate New York followed, plundering Atlantic City‘s customer base even further.
By 2020, 50% of Americans lived within 25 miles of a casino according to research firm Union Gaming Analytics. Atlantic City‘s regional dominance had evaporated thanks to new casinos from West Virginia to Maryland to Rhode Island. Bereft of its strategic monopoly advantage, the city slid into decline.
Doubled Down on Casinos: Failure to Diversify Beyond Gaming
Rather than offset newcomers by adding fresh tourist magnets, Atlantic City simply doubled down on casinos. Efforts to move beyond gaming never fully materialized. Despite lip service towards diversifying amenities, the city remained overwhelmingly reliant on casino tourists.
This contrasted sharply with the successful blueprint pioneered in Las Vegas. Sin City differentiated itself as a multi-faceted tourist Mecca with endless entertainment, shows, nightlife, luxury shopping, and culinary options for visitors of all types. But Atlantic City never managed to advance substantially beyond its core casino product. And once gaming revenues tumbled due to new regional competition, the city had precious few other industries left to fall back on.
Yes, Atlantic City tried sprinkling in some new attractions and amenities around the margins. A bevy of celebrity chef restaurants popped up to capture foodie tourists. The massive quarter-billion dollar Revel casino added trendy shopping outlets alongside gaming in 2012. Family-friendly venues like the Steel Pier amusement park, the Atlantic City Aquarium, and Boardwalk Hall pulled in some non-gambling visitors.
Overall however, such endeavors never shifted Atlantic City‘s fundamental identity as a gambling hub. Casinos remained the destination‘s undisputed headliner, accounting for nearly 75% of its tourism traffic as recently as 2019. With so many eggs in one basket, the opening of casinos elsewhere devastated Atlantic City.
And at just nine casinos, Atlantic City today offers visitors far less gaming options than leading rivals like Pennsylvania (16) and Las Vegas (60+). Focused so heavily on casinos, Atlantic City failed building a diversified tourism portfolio resilient enough to withstand increased competition.
The Present: Tentative Turnaround Efforts
After hitting rock bottom in 2014 when four casinos shuttered, Atlantic City is now showing faint signs of a rebound. Billions have poured into flashy new resorts like the Hard Rock Hotel & Casino in recent years. Tourism numbers have partly improved post-pandemic as casino profits ticked up 7% last year.
But behind the veneer, systemic economic threats continue lurking. Atlantic City still leans far too heavily on its troubled gambling niche for prosperity, while falling behind rivals on amenities. Just 62% of casinos have exceeded their pre-pandemic revenue numbers as of late 2022 – hardly cause for jubilation.
And with 23% of city residents still mired in poverty, urban blight remains rife across swathes of Atlantic City. The city‘s current strategy seems largely focused on rebuilding casinos instead of investing into sustainable renewal based on diversified offerings. As competition keeps mounting, such an approach leaves Atlantic City precariously vulnerable to history repeating itself.
The Verdict: Diversify Beyond Casinos or Decline May Continue
At its pinnacle, Atlantic City marketed itself as "the world‘s playground" – a reference to its beaches, restaurants, iconic Boardwalk, and much more. Yet in practice, casinos were always king. This overwhelming reliance on gaming came back to haunt Atlantic City as neighboring markets modernized.
Increased regional competition shattered Atlantic City‘s longstanding monopoly advantage. Rather than effectively responding by giving tourists more reasons to visit beyond casinos, the city remained dependent on a declining industry. The resulting slide cost jobs and fueled urban decay still plaguing Atlantic City today.
Other cities eyeing major gaming expansions should view Atlantic City‘s saga as a cautionary tale. While casinos can energize struggling communities, over-dependency on gaming dollars is often perilous. Just as Atlantic City lacked a Plan B once its gaming supremacy disappeared, cities considering gambling need safeguards against potential declines. If visitors lose interest in the slots and roulette wheels, what else is there to attract them?
Atlantic City still holds fond memories for many gamers like myself. Yet its heyday has likely come and gone unless new solutions emerge. For Atlantic City to craft a sustainable future, difficult as it may be, escaping the long shadow of casinos seems essential. The mantra cannot be purely rebuilding gaming resorts. Rather, economic diversity is paramount – matrixing casinos with other unique attractions that give potential tourists multiply reasons to choose Atlantic City. For a true turnaround, reinvention as something beyond just another gambling destination is key.
