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Posts Tagged ‘Pinnacle Entertainment’

Atlantic City Blues (& some good news too) – ARCHIVE

Posted by jkarmel on June 2, 2010

[ARCHIVE: Originally published by GA on November 7, 2008]

Borgata just laid off 400 workers and the total number of casino employees in Atlantic City is down 799 from a year ago at 40, 124. Now, there’s always a mild seasonal effect in the coastal resort, but the Borgata constriction is relatively significant. For five years, Borgata has mainly been going gangbusters in Atlantic City: single-handedly changing the town’s casino image from downscale to hip. This is its first layoff — a rarity in a cyclical industry where layoffs are far from unknown (at least in AC). For two years, it has generally maintained strong revenues as other AC properties took big hits amidst economic decline, skyrocketing gas prices, Pennsylvania competition and the partial smoking ban.

Meanwhile, Pinnacle put its $1.5 billion, 20-acre casino development on “indefinite hold” & announced that it would listen to offers for the prime property smack dab in the middle of the Boardwalk strip. I’m guessing there may be some offers and who knows, maybe a better-capitalized firm will get that casino built sooner than Pinnacle. This news comes just after official confirmation of MGM Mirage’s ominous suspension of its $5 billion project in the Marina. It also comes amidst the tragi-comedy that is the city council’s efforts to ban smoking completely from the casino floor. Now that Maryland has legalized gaming, another competitive threat enters the AC universe, though one of the best gaming analysts around (Michael Pollack) is minimizing that particular issue. Dave Schwartz had a great snapshot from this episode a few weeks ago on the die is cast, his excellent blog.

I’ve been in Atlantic City a lot working on Gambling on the American Dream and conducting oral history over the past five years. In that time, I’ve gotten to know it well. AC has a fighting spirit and its community is adaptable and ever-forward looking. Since the mid-1980s, it has become very diverse and once-faded sections of town are now lively, interesting neighborhoods full of hard-working immigrants from all over Latin America and Asia mixed with the descendents of Irish, Italian & Jewish immigrants from the early 20th century. The city’s sizeable African-American community has a rich history and strong sense of community. For the most part, everybody gets along. Most casino patrons never see this flip side to Atlantic City, nor do they see the many new houses subsidized by casinos via New Jersey’s unique funding formula with 1.25% of the casino ‘win.’

Maybe its because I grew up in the Bronx, but AC’s diverse, gritty urban culture is appealing to me. The place has tons of character — its unique, not generic. I’m still in AC regularly as we wrap up the Atlantic City Free Public Library’s ’30 Years, 30 Voices’ oral history project and understand the problems that city and local casinos face, but I’m optimistic for it too.

The Atlantic City casino industry has been through tough times before in its casino years –such as the junk bond debt crisis of the late 1980s – and pulled through well. The casino industry, smart regulators and local leaders dealt with the new competitive threats posed by Foxwoods, Mississippi and riverboat casinos in the1990s very effectively by adjusting the regulatory code and launching a wave of casino expansion and mixed development that culminated with Borgata and the Walk retail outlet center. Many of the properties added new hotel towers, expanded their casino space and otherwise became stronger and it worked: AC was doing quite well overall until the late troubles. The Revel project is coming along steadily just east of Showboat and will likely be the Boardwalk equivalent of the Marina’s Borgata in terms of new style and glamour.

No one knows for sure what will happen — but AC’s recent problems are probably only temporary, if history is any guide.

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