Over Saturated and More

The last week New Jersey newspapers have been full of rumors about further Atlantic City casino closings. With the recent announcement of the Trump Plaza closing, the total this year comes to 4. The popular question is why?

A PhD is not required to answer this question. Since Atlantic City’s hay day, casinos have sprouted up in nearby Pennsylvania as well as Connecticut, Massachusetts and Maryland. In short, there are too many gambling locations for too few gamblers.

A harder question to answer is why have only certain casinos closed?

Atlantic City has two clumps of casinos. The largest number are strung out along the boardwalk next to the ocean. For reasons that are not clear, the cliental which frequents the AC boardwalk are lower blue collar. While this cohort does frequent the casinos, they are not “big rollers”.

The streets on the opposite side of the Boardwalk casinos present another marketing problem. There, one finds homeless and unemployed people (urban poverty). The prospects of a casino hotel guest taking a walk around the nearby neighborhood is not too attractive.

So the Boardwalk located casinos have relied upon “drive-in, drive-out” guests.  In other words, the casino could be located anywhere which was a convenient drive.

With the overall market size decreasing due to the new casinos in other States, the Boardwalk casinos were left to compete on the basis of what each offered compared to other Boardwalk casinos. Some tried harder than others. Those that have closed were not competitive enough.

Atlantic City’s urban poverty is not a new phenomena. As each new casino was announced to great fanfare, politicians promised jobs, new housing, and in short, a new Atlantic City. The new city on the hill never happened and now the die is cast with no more promises about a bright future.

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