Neighboring States' Casinos Cast Bad Luck On Atlantic City

Atlantic City is losing two casinos this week. One factor is competition. There are more casinos catering to smaller pools of local customers. Maryland opened its fifth casino last week.

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DAVID GREENE, HOST:

And let's take a closer look at some changes that might be driving those closures in Atlantic City. One factor of course is competition. More casinos are popping up, giving gamblers options. Sometimes they can hit the slots or craps tables closer to home and they don't have to drive all the way to the Jersey shore. Which brings us to Baltimore, Maryland, where the state's fifth casino opened last week. The gleaming two-story Horseshoe Casino is conveniently located, it's right off the interstate, near a train station and right near the city's pro-sports stadiums.

WALTER WILSON: You know, we used to travel to New Jersey for that. Now all of the sudden we got it right here in Baltimore.

GREENE: That's Walter Wilson. He's a craps player from Reisterstown, a Baltimore suburb.

WILSON: New place, let's go see if we can get some new money.

GREENE: And local politicians are hoping the Horseshoe pours new money into government coffers. This casino agreed to pay $11 million to the city of Baltimore in its first year. It's also hired hundreds of city residents and this is a common arrangement these days. Philadelphia, Pittsburgh, Detroit, Cleveland, they've all welcomed casinos in recent years. But Suzette Parmley of the Philadelphia Inquirer says there is a risk. Each time a new casino opens its steal some customers from another regional casino. Parmley says the casinos are not raking in the big bucks that were predicted.

SUZETTE PARMLEY: Pennsylvania's a terrific example. I've been covering it since '07 when they started ramping up with their casinos - they have 12 now. But that was the promise, we're going to, you know, have this money for senior programs, we're going to aid property taxes. And the first couple years after the ramp up, I'd say from 2012 to 2013 it was booming. Billions of dollars coming into Pennsylvania that you didn't before. But what's interesting is the past year Pennsylvania has already flattened out. It's actually on a slight decrease this year in revenue than last year. It's still making a lot but already the trajectory is going downward because you have Maryland in the mix now, you have Ohio in the mix. So, this is what I'm talking about, it becomes a zero sum game. The revenue's not going as quickly as they anticipated.

GREENE: And in all of this the hardest hit has been Atlantic City. For so long people in cities like Philadelphia and Baltimore would take day trips to AC.

PARMLEY: And that market has basically disappeared for Atlantic City. The convenience gambler has disappeared from Atlantic City and that's what's killing the town.

GREENE: At the end of the month some 6,500 jobs will have been lost. But fewer casinos in Atlantic City will be competing for gamblers and Suzette Parmley says people in the city hope that will stabilize the market.

PARMLEY: I think that's basically what the mayor said on Friday. He had a press conference on the boardwalk and he said the market is going to determine how many successful casinos Atlantic City can have. And we're going to find out in the next two years if eight casinos in Atlantic City is much better than 12 or if we need get down to six or seven by 2016 or 2017 as some analysts have predicted. That's why it's so fierce. Only so many can survive when you have a limited pool of new gamblers and discretionary spending in the economy remain weak.

GREENE: You say limited pool of new gamblers. Is there something about gambling that just makes it, sort of, really hard to generate interest in people and grow that market potential.

PARMLEY: Well, you have a new generation and Atlantic City tried to placate this new generation with Revel, with the nightclubs and the beach bars. The issue with that is that the younger generation may not gamble as much and gambling still pays, you know, the bills. It's 75 percent of Atlantic City's revenue. What's known as the sweet spot in gambling is the 55-year-old woman who plays slots. And then your 30 percent which is the seniors and if they're not gambling as much because their pensions got hit. So, you see what's going on here? You know, it's multifaceted and like I said the next generation really wants the nightclubs and the restaurants and all that stuff. But it's going to be a balance for casino operators because what pays the lights and the electricity is still that slot machine.

GREENE: What about the people who raised moral objections to gambling? Talking about the possibility for addiction, sort of setting a bad example. I mean, have those opponents become quieter as this boom has happened and what are they saying now?

PARMLEY: You know, it's fascinating, I just did a story last week on this. The faith-based-organizations and the churches in Atlantic City are actually coming to the aid of all the casino workers. And basically they turn the other way 36 years ago when Atlantic City was proposing to get casinos. Because they said the greater good was greater than the evil that gambling would bring in, which was jobs. And now that jobs, about 6,500, are being paired in Atlantic City in the next two weeks all of the sudden it's like, you know, we're OK if these casinos survive if it means clothing and feeding and providing shelter for our casino workers. It's almost like -I'd say a quiet acceptance of it.

GREENE: Suzette thanks so much for talking to us about this, we appreciate it.

PARMLEY: Thank you so much for having me.

GREENE: Suzette Parmley covers gaming for the Philadelphia Inquirer.

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