Why is Atlantic City so Run Down?
In short, Atlantic City is run down because of a devastating one-two punch: the loss of its long-held gambling monopoly in the region coupled with the failure to diversify its tourism-dependent economy. Once the premier East Coast tourist destination, Atlantic City has fallen into poverty, urban decay, and a perpetual crisis of identity and purpose.
Atlantic City enjoyed decades of prosperity as the top beachfront resort on the East Coast in the early 20th century. But its fortunes began gradually declining in the 1950s as cheap air travel took off and people had more distant vacation options. The 1964 transformation of the central boardwalk into a pedestrian mall alienated locals and gave the city a honky-tonk vibe that turned off families. Still, Atlantic City maintained its status as a top destination.
That started to definitively change in the late 1970s as Atlantic City legalized casino gambling, hoping casinos could revive tourism. It worked for a time. Atlantic City held a monopoly as the only place in the Northeast with legal casinos. From the late ‘70s to mid 2000s, casinos brought jobs and visitors. But the city didn‘t take advantage of the prosperous years to diversify its economy. It remained dependent on casinos and tourism. This made it vulnerable when new competition emerged.
Regional casinos in Connecticut, New York, Pennsylvania, Delaware, and Maryland opened over the next decades. Atlantic City‘s monopoly was gone. Most critically, Las Vegas casinos reinvented themselves as full-scale adult playgrounds with star chefs, huge hotels, pools, clubs, and amusement parks. Gamblers now had attractive alternatives closer to home. Atlantic City‘s aging casinos simply couldn‘t compete.
The 2008 recession was the tipping point. With households cutting back on discretionary spending, fewer people were willing to gamble in Atlantic City. Casino revenues crashed from $5.2 billion in 2006 to just $2.86 billion in 2015. Thousands lost casino jobs. And critically, Atlantic City lost the industry that funded everything else. The city government was sent spiraling toward bankruptcy with the eroded tax base.
Competition Snatched Away Gambling Monopoly
For decades, Atlantic City held a monopoly on East Coast gambling. But in the 1990s and 2000s, casinos opened in nearby states:
- 1992: Foxwoods in Connecticut
- 1996: Mohegan Sun in Connecticut
- 2006: Sands Bethlehem in Pennsylvania
- 2008: Parx in Pennsylvania
- 2009: SugarHouse in Pennsylvania
These regional casinos allowed East Coast gamblers to stay closer to home. Las Vegas also redefined itself as an adult playground. Atlantic City‘s aging, sedated casinos couldn‘t compete. Their monopoly was gone.
| Year | Atlantic City Casino Revenue |
|---|---|
| 2006 | $5.2 billion |
| 2015 | $2.86 billion |
Atlantic City went from over $5 billion in casino revenue in 2006 to under $3 billion in 2015 due to increased competition.
Failure to Diversify Tourism Economy
While casinos revived Atlantic City in the late 1970s, the city didn‘t capitalize on the prosperity to diversify its tourism economy beyond gambling. Cities like Las Vegas and Orlando built up conventions, entertainment, restaurants, nightlife, attractions, and business travel. According to Ioana Rusu, business analyst at Stockton University, "Atlantic City focused too narrowly on gaming revenues instead of developing a more robust and diversified tourism economy." This left the city extremely vulnerable to downturns in the casino industry.
- Boardwalk Hall convention center hasn‘t attracted many national conferences
- Limited effort to position as a meetings destination
- Minimal tech/innovation jobs outside casinos unlike Las Vegas
- Promotions overly focused on casino offerings vs. broader tourism appeal
Atlantic City remained dependent on casinos and lacked other growth industries. So when gambling revenues crashed, the whole city crashed.
Poverty, Unemployment and Urban Decay Emerged
As Atlantic City’s casinos hit hard times in the 1990s and 2000s, poverty and unemployment grew worse:
- 35% poverty rate in Atlantic City (US Census Bureau)
- 10% unemployment rate in the metro area in 2013 (Bureau of Labor Statistics)
Thousands lost casino jobs with little else to fall back on. The growing poverty also fueled crime. Violent crime rate grew over 40% from 2010 to 2018 according to FBI data. The city‘s housing stock and infrastructure decayed as the tax base eroded. Atlantic City was left with a sense of malaise.
Impact of 2008 Recession
The 2008 recession had a devastating impact on Atlantic City‘s casinos. With households cutting back, fewer visitors were willing to gamble in Atlantic City. Casino revenues crashed:
- 2006 – $5.2 billion
- 2015 – $2.86 billion
The drastic loss in casino tax revenue nearly bankrupted the city. Four casinos closed between 2014-2016, eliminating thousands of jobs. Painfully, the city lost the one industry that supported everything else.
Looming Casino Closures and Bankruptcy
From 2014-2016, four casinos shuttered including flagship properties:
- Atlantic Club
- Showboat
- Revel
- Trump Plaza
Remaining casinos struggled with declining revenue. The city verged on bankruptcy due to the eroded tax base. New Jersey provided aid packages and took over management of operations to narrowly avoid insolvency. But the city couldn‘t reverse the downward spiral on its own.
Urban Decay and Infrastructure Decline
With poverty rising and casino revenue declining, Atlantic City struggled to maintain its infrastructure and housing stock:
- Pothole-filled roads damaged vehicles
- Aging water pipes ruptured – loss of 30% of water due to leaks
- Housing vacancy rate rose to over 15%
This urban decay fed the image of Atlantic City as a has-been town. Efforts at new development focused on casinos rather than neighborhoods. Locals felt forgotten as tourism promotion burdened casinos.
Efforts to Revitalize and Diversify
New Jersey‘s government has tried to spark a turnaround in Atlantic City:
- Legalized sports betting to expand gaming revenue
- Invested in new attractions like Hard Rock casino, amusement park
- Stockton University campus expansions
- Building up medical facilities through AtlantiCare
But these investments have so far only slowed the decline rather than reversing it. Atlantic City still lacks enough jobs and economic diversity for a full revitalization.
Despite the severe challenges, Atlantic City has stabilized and is showing early signs of revival:
- Casino revenue bounced back to $2.86B in 2019 from a low of $1.9B in 2016
- 8 million visitors in 2021 – 2nd highest since 2005 (CRDA)
- Stockton campus driving growth of new businesses
- Younger families moving in drawn by affordable housing
As John Palmieri, Executive Director of CRDA notes, "Atlantic City is beginning to regain its footing. We still have a long way to go but the foundations are there for a more sustainable future." It will require further diversification and community revitalization. Gambling is no longer enough to sustain the city.
Atlantic City still offers appealing attractions like beaches, casinos, entertainment, dining, and nightlife that can make for a fun, affordable getaway in the Northeast. The boardwalk and beaches are still beautiful and family-friendly. New casinos have also helped freshen the city‘s offerings.
However, Atlantic City is still a city struggling with poverty and urban decay. While the tourist areas have improved, many neighborhoods remain rundown. Crime and homelessness remain issues in the city‘s outskirts. Visitors should stick to the tourist zones. Don‘t expect luxury but Atlantic City can still make for an enjoyable budget trip. Just keep expectations in check.
While Atlantic City will likely never regain its glory days, there are finally real reasons for optimism. The stabilized casinos, growing university campus, and revitalized downtown show the city can revive itself as a tourism and lifestyle destination. But the economic diversity is still lacking. Atlantic City needs more innovative industries, skilled workers, and community development to ensure the improvements are lasting. It will be a long process, but Atlantic City seems to have hit bottom and started on a slow road back up. The iconic seaside city now needs the vision and persistence to complete its comeback story.