Can Sports Betting Do for Atlantic City What Trump Couldn’t?
Posted June 25, 2018 5:27 p.m. EDT
ATLANTIC CITY, N.J. — The last time there was so much hype about the future of this troubled seaside resort, Donald Trump was doing most of the hyping.
The president, then a casino impresario, opened the Trump Taj Mahal, the biggest gambling venue on the boardwalk, with great fanfare and at a cost of $1.2 billion in 1990, only to have it collapse into bankruptcy the following year. After years of decline, it shut down in 2016, seemingly consigned to symbolize the ruinous excess here during the Trump era.
But now, less than two years later, the old Taj, stripped of its faux minarets, concrete elephants and any evidence of the Trump name, is about to reopen as the Hard Rock Hotel & Casino. On the same day, June 28, another failed casino — the epically disastrous Revel — is being reanimated a short stroll up the boardwalk as the Ocean Resort.
These revivals are scheduled just as New Jersey’s casinos scramble to cash in on another way of separating gamblers from their savings: wagering on sporting events. The Borgata casino started taking bets on sports on June 14 and others, including the Ocean Resort, are rushing to install sports books in prominent spots on their casino floors. Adding a popular form of gambling could help draw customers during the dreary winter months.
Altogether, it adds up to more opportunity than many people who live and work here could have imagined just a few bleak years ago when five of the city’s 12 casinos failed and a state takeover rescued the city from a bankruptcy filing.
Though this once famous gambling mecca still has far to go to reverse its fortunes, some boosters are already painting a rosy picture.
“All around us we get glimpses of Atlantic City’s future, as new buildings rise and old streets get new life breathed into them,” Gov. Philip D. Murphy, a Democrat, told a lunchtime crowd at a recent gaming conference here. “Not long ago — it was not long ago at all — folks were writing Atlantic City off. It was past its prime. The economy was dead. Now, when people speak of Atlantic City, they speak of renewal, they speak of opportunity.”
New Jersey became the second state — Nevada was the first — with a legal casino when Resorts International opened on the boardwalk in 1978. But a gaming license has not always been a sure thing. In a race to cash in, Trump and his competitors often borrowed more than they could pay back.
At one point, this small city had 13 casinos, three of them controlled by Trump. But each of his properties fell into bankruptcy and he eventually withdrew from the business. Caesars Entertainment, which still owns three casinos here, had been saddled with about $25 billion in debt before it went into bankruptcy in 2015.
Given the city’s record, not everyone has been won over by pledges from casino executives and elected officials to make Atlantic City a more family-oriented resort. The same promises have been made for decades, yet the city has remained dependent on gamblers even though it long ago lost its status as the only place in the country that welcomed them outside of Las Vegas. The countryside is now dotted with casinos, including several within a short drive.
After Pennsylvania, Delaware, Maryland and New York made casinos legal, those states drained a large share of Atlantic City’s lifeblood. What once was a stream of more than $5 billion in annual revenue has been cut in half and not even the most hopeful investors expect a full rebound.
“Do I think the gaming market ever comes back to close to $6 billion in revenue? No. Not even close,” said Jim Allen, chief executive of Hard Rock International.
But still, his company and its local partners, the Jingoli and Morris families, have invested more than $500 million to turn the shuttered Taj Mahal into a resort that emphasizes live music and entertainment. Hard Rock’s read on consumer sentiment is that people are rooting for Atlantic City to succeed but they think that it had “lost its way,” Allen said.
The latest round of investment in casinos on the boardwalk, he said, is a watershed for the city.
“If a brand like Hard Rock fails in Atlantic City, the interest in investing capital in that town is going to diminish significantly,” Allen said. “However, if we are successful, then I think the future is very bright in Atlantic City.”
As for tapping into sports gambling, Allen said the Hard Rock was preparing to announce a partnership with a company that would run a sports book in the new casino. He said he expected sports bets to provide a modest boost to the casinos’ profits and to draw people in during big events like the Super Bowl.
“It is another positive thing happening,” he said. “It is another reason to go to Atlantic City.”
The owners of the newest casino on the Boardwalk, Ocean Resort, are making a bigger wager on sports betting. They are turning a bar at the center of the casino floor into a sports book that will serve as a place for fans to watch games as well as bet on them.
“Coming from Nevada, it’s hard to even imagine a casino without a sports book,” said Seth Schorr, an adviser to Bruce Deifik, the casino’s chairman. In Nevada, the only place in the country where betting on sports was legal before this month, about $4.8 billion was wagered on sports last year and casinos kept about $250 million, according to the UNLV Center for Gaming Research.
Standing in the empty space that he said would be ready to start accepting bets when the casino opens Thursday, Schorr said, “You have to have an exciting environment to watch the game. Our goal is to create experiences.”
One state lawmaker who pushed for New Jersey to legalize sports betting, former Democratic state Sen. Raymond Lesniak, pointed out that the big weekends in sports betting occur during months when the casinos are much quieter.
“Atlantic City does fine during the summer, but offseason, it’s starving,” said Lesniak. “During the NCAA Tournament, Super Bowl week, any big event, you can’t get a room in Las Vegas and Atlantic City is a ghost town. That changes with sports betting.”
Indeed, the prospect of filling what were once slow weekends is the real hope among Atlantic City casino operators, rather than the potential tax revenue sports wagering would yield for the state or the city. Moody’s estimated that New Jersey’s casinos could win about $125 million annually on sports bets, less than 5 percent of what the seven remaining casinos won last year. They also earn revenue as the exclusive purveyors of online gambling in the state. As soon as the Borgata started taking bets on sports, it had a billboard announcing the new gambling outside the Lincoln Tunnel in New Jersey. “We feel like the vibrancy this type of offering will create will extend beyond just the race and sports book and spill out onto the rest of the property,” said Marcus Glover, president and chief operating officer of the Borgata.
Deifik, owner of Ocean Resort, predicted that sports betting would keep more gamblers in the region. “Instead of getting on a plane and going five hours to Las Vegas from the East Coast and New Jersey, people will stay here,” he said.
The bigger uncertainty about Atlantic City is what the reopening of two big casinos will mean for the market. Will they attract a significant number of new customers to the city or simply cannibalize the weaker competitors?
Resorts made a profit of less than $3 million last year, compared with more than $80 million for the Borgata, according to the state Division of Gaming Enforcement. Bally’s, one of the three owned by Caesars, had a profit of about $8 million in 2017.
Despite the city’s tattered history, Joseph Jingoli is brimming with optimism. A politically connected builder, Jingoli’s company is rehabilitating the old Taj and constructing a complex in Atlantic City that will be home to a campus of Stockton University and the relocated offices of South Jersey Gas, a utility.
“We’ve been watching this market,” he said, referring to himself and his partner, Jack Morris, a developer. “We think now’s the time.” As evidence of Atlantic City’s resilience, Jingoli mentioned some entrepreneurs who are making investments of their own. Deborah and Mark Pellegrino quit their jobs in the hospitality industry and sank about $200,000 into Made, a chocolate-making business with a small bar attached half a block from the boardwalk.
Flanked by sacks of cocoa beans from Madagascar and other faraway places, Deborah Pellegrino said some casinos have shifted what had been their long-standing attitude — they have stopped discouraging customers from venturing outside their walls and exploring the city. “I think there’s a new audience and they want a new experience,” she said.
With a full slate of concerts booked — ranging from Frankie Valli to Pitbull — the Hard Rock is banking on entertainers to attract a wave of younger, more curious visitors, Jingoli said. “We’re here to grow the market.”
Some longtime casino customers are less ebullient. Sitting on a bench between Ocean Resort and the beach, Marjorie Parker, who lives in Brooklyn, sounded skeptical.
“They’ve got a lot of work to do,” Parker, a retired Citibank employee, said as she studied the glass-plated tower that will soon be the Ocean Resort. Wearing a lanyard that held membership cards to several casinos, Parker recalled visiting the Borgata the day it opened 15 years ago. She said she had only returned two or three times.
She said she preferred less-glitzy places like Bally’s, where she said she could stay two nights for as little as $50 after riding a bus from the Port Authority in Manhattan. Asked what the new casinos could do to attract low-rollers like herself, Parker advised them to be more generous.
“People want to win,” she said. “They don’t want to lose all their money.”
But for a city where so many have struggled for so long, the new casinos are already improving lives. In preparation for its debut, the Hard Rock hired more than 3,000 people, at least 800 of whom worked at the Taj. Dora Brooks, 58, and Mary Martinez, 62, were there when the biggest union, Local 54 of UNITE HERE, went on strike in 2016 and hastened the Taj’s demise.
“It was very depressing,” Brooks said. “My heart was just broken in two.”
An Atlantic City native, she said she had been personally offended by all the talk of her hometown’s tailspin. “When people talk about Atlantic City, I feel like they’re talking about me,” Brooks said.
Martinez, who has lived in Atlantic City for 15 years, said she had not expected to land another full-time job in a casino, but she never lost hope.
“I never saw it as a downward spiral,” she said. “I always thought of Atlantic City as a little, bright shining star.”