NJ leaders seek a new course for Atlantic City

Monday's closed-door summit meeting on the future of Atlantic City, featuring no less than New Jersey Gov. Chris Christie along with casino executives and union leaders, had no shortage of urgent topics to discuss.

A glut of casinos in the Northeast has caused the Jersey Shore town's gaming industry to collapse over the past few years. Revel, a $2.6 billion glitzy resort that was supposed to reshape Atlantic City's image, shuttered its doors on Sept. 2, two years after opening, putting more than 3,000 people out of work. Caesar's Entertainment closed its Mardi Gras-themed Showboat on Sept. 1, with a loss of more than 2,000 jobs. Trump Plaza, which despite its name has only a marginal connection to real estate mogul Donald Trump, is due to cease operations on Sept. 16. It employs about 1,600.

According to reports in the Philadelphia Inquirer and other media outlets last week, the Trump Taj Mahal, whose garish, Indian-theme décor has been part of Atlantic City's boardwalk since 1990, may be the next to close its doors.

Taj Mahal Associates, which owns the property, has warned in a recent financial filing that it needs to borrow more money and restructure its business in order to survive. The casino, which employs 2,825, couldn't guarantee that those efforts would be successful. These reports came as a surprise to Fitch Ratings Lex Bumazhny, who follows the casino industry.

"The property is close to breaking even," he said in an interview, adding that operators would prefer to keep their casinos open, given that they incur costs for shuttered properties such as security and property taxes.

Though the Trump Taj Mahal reported a gross operating profit of $1.8 million in the second quarter of this year, that was down 63 percent from the year-earlier period. On a net basis, the casino lost $11.6 million during that period, versus $6.9 million a year earlier.

Israel Posner, who heads The Lloyd D. Levenson Institute of Gaming Hospitality & Tourism at New Jersey's Stockton State College, said he didn't have a "crystal ball" to divine the Taj Mahal's future. But the property "is one of the largest buildings in New Jersey," he said. "It takes quite a bit to maintain something of that scale."

Christie recently organized a state takeover of key parts of the city's famous boardwalk to turn it into "a family-friendly destination." According to media reports, the potential 2016 presidential candidate has issued a directive to allow sports betting at New Jersey casinos and racetracks. However, professional sports leagues and the NCAA have both opposed the state's efforts to legalize sports betting.

Questions abound about the future of Atlantic City, which attracts 25 million visitors annually, more than any other beach area in the East Coast, Posner said. He noted, though, that the shore is a selling point for only two months a year.

"This was an inevitable occurrence," Christie said after the Monday summit meeting, according to the Associated Press. "When you have the kind of competition that's been coming up, Atlantic City at this size of a gaming footprint was not going to last." The governor also said when it comes to what happens next, "Everything is on the table."

While there has been talk that the closed casino properties could be reborn as hotels or other nongaming properties, no deals of this sort have yet to materialize. A spokesman for Trump Entertainment could not be immediately be reached.

Unable to wait for any ultimate solution, officials in Atlantic City are scrambling to help displaced casino workers get government assistance and maybe even new jobs. Mayor Don Guardian has said he wants to make the city more friendly to gay visitors (Atlantic City's first Republican leader in decades is openly gay).

"Historically, Atlantic City has welcomed gay people," Posner said. "It's certainly something that a lot of people think is important."

Unfortunately, Atlantic City's situation isn't unique. In June, Caesar's Entertainment closed its Harrah's casino in Tunica, Miss., citing an oversupply of casinos in the market, putting 1,300 people out of work. Revenue at Indiana's casinos have plummeted in recent months in the wake of the opening of two race track casinos in neighboring Ohio. Fitch estimates that gaming properties in the Buckeye State are getting about two-thirds of their revenue from neighboring states.