Making the News

eGaming Review

Originally Published:Thursday, May 10, 2007

The first casino duly opened in 1978 and Atlantic City has never looked back. While many presume Atlantic City is nothing more than Las Vegas East – a facsimile of its western cousin but without the desert air – Michael Pollock, consultant at Spectrum Gaming based in New Jersey, points out that originally the reverse was true.

“It was the pioneer,” he says. “It was the first city of the modern casino era. Las Vegas actually reinvented itself due to the success of Atlantic City.”

As Pollock says the introduction of gaming in Atlantic City saw the birth of the “full-service offering”. Even Vegas was not what we have come to know it as since.

“Atlantic City didn't want to be like Las Vegas. It was not a good model to follow. It wasn't the Vegas of today.”

Betting on a shore thing

By SCOTT LONGLEY
eGaming Review

THIS IS PERHAPS AN example of how it should have happened... Suffering from the effects of a long-standing downturn in the tourist trade off the back of cheap flights and competing attractions both near and far, Blackpool city council decides that the future lies in remaking itself as a gaming centre.

After much debate and a local referendum, legislation is passed inviting bids for a number of large casinos along the front. The first is due to open in 2009, followed by two more within the next six months...Such at least would likely be the dream for the civic leaders in the tourist capital of the UK's north-west, if it was not for the unfortunate fact that such decisions are beyond the jurisdiction of local government in the UK.

But this is exactly what happened 30 years ago across the pond in Atlantic City.

Comparisons with Blackpool

"Atlantic City is often compared to Blackpool," says Jeffrey Vasser, executive director at the Atlantic City Convention and Visitors Authority. "It was once one of the world's most well-known resorts. It thrived from the late 1800s and into the mid-1900s.

"However, when commercial air travel became affordable and accessible to the masses, as well as home air conditioning and backyard pools, business began to dwindle."

By the mid-60s, according to Vasser, tourism in this primarily summer resort had dropped dramatically and the area's economy was suffering accordingly.

"Looking for a way to bring tourists back to the city, the idea of introducing gaming to Atlantic City was conceived and introduced by some local business leaders," he adds.

"To implement the plan, voters had to approve a referendum allowing a change in the constitution of the state of New Jersey to permit legalised gambling. The first referendum failed, but in 1976 a second attempt was successful."

First city of the modern casino era

The fi rst casino duly opened in 1978 and Atlantic City has never looked back. While many presume Atlantic City is nothing more than Las Vegas East - a facsimile of its western cousin but without the desert air - Michael Pollock, consultant at Spectrum Gaming based in New Jersey, points out that originally the reverse was true.

"It was the pioneer," he says. "It was the first city of the modern casino era. Las Vegas actually reinvented itself due to the success of Atlantic City."

As Pollock says the introduction of gaming in Atlantic City saw the birth of the "full-service offering". Even Vegas was not what we have come to know it as since.

"Atlantic City didn't want to be like Las Vegas. It was not a good model to follow. It wasn't the Vegas of today."

From the start, Atlantic City knew it was about more than simply allowing a few casinos on the boardwalk.

Says Vasser: "Studies showed that tourists love to shop as their number one activity, along with eating out and enjoying spas. To build what was primarily a day-trip destination into an overnight resort destination, casino operators examined the assets that already exist in Atlantic City. That is primarily the beach and the boardwalk.

They then evaluated what they thought was missing - the shopping, dining, nightlife and spas."

But with such a full-service offering, as much with gambling itself, you have to forever strive to keep the customer satisfied.

Keep the home fire burning

Atlantic City may have got the jump on Vegas way back when, and may indeed as the slogan has it be ‘Always Turned On'. But after 25 years or more of enjoying very good growth, Atlantic City is once again feeling the pinch.

Competition, from low-frills slot operators in neighbouring Pennsylvania and also from Yonkers racetrack in New York, means Atlantic City has become something of a harder sell. The city is having to do more to entice those from its natural constituency of New York City and its environs, the northern suburbs and east Pennsylvania. In the first few months of this year, revenues were beginning to show signs of a decline.

"For 25 years Atlantic City has been enjoying year-on year growth, and that meant no one was pushing to develop new products," says Michael Facenda, director of marketing services at the Borgata.

As if to emphasise this point, it should be pointed out that the Borgata is Atlantic City's newest casino, opening in 2003. It was also the first new casino in Atlantic City for 13 years.

"Atlantic City was changing," says Facenda. "They were taking out the table games and putting in more slots. People began to reject it, outside of the slot players."

Laying the groundwork

For the founders of the Borgata, move number one was to find out why these ‘rejecters' were no longer coming to the city.

"We did research when we started the Borgata project,"says Facenda. "We prioritised the people who were no longer coming along to Atlantic City. We asked them what Atlantic City - and specifically of course the Borgata -would have to offer them, to entice them."

"We found it was restaurants, entertainment, spa facilities, nightlife options, and poker," he says. "People said they would come to us if we had poker."

The Borgata followed up this research with some impressive investment, spending over US$1bn on the initial development and a further US$200m later for the first extension project.

"Originally we had a 35 table poker room - and people thought we were crazy. But it proved to be so successful that the extension added another 85 table poker room.

Plus we have three new restaurants, a nightclub and a cafeteria."

Now the Borgata is busy adding another US$400m development, with a new hotel called the Water Club, with 800 rooms and suites, and six new retail outlets.

"We have a very aspirational facility here," says Facenda.

"We are not a Rolex - but we are not a Timex either. We are in between and we appeal to both segments. We are nicely positioned."

Vasser agrees that the Borgata and its success have shaken things up elsewhere in Atlantic City.

"It was more modern and up-to-date than many others,"he says. "Those that had not updated their properties in many years looked outdated and tired by comparison, thus the renovation projects began."

This was backed up by further action from the state government, with legislation introduced and approved that encouraged casino companies to expand their hotels while building non-gaming amenities such as the Borgata had introduced.

Says Vasser: "Projects such as the Quarter at Tropicana took advantage of this legislation, as well as others, and all of these things together have taken Atlantic City to a higher level. Now we have the addition of the Pier shops at Caesars, House of Blues and a number of renovation projects on the Boardwalk, and at other casino hotels and non-casino hotels, totalling nearly US$2bn in investment."

Facenda says the moves elsewhere in Atlantic City are a "compliment" to the Borgata's success. "The fi rst object was to steal market share from our Atlantic City competition," he says, "The next objective was to grow market share, to attract the rejecters, to get them back in. The Jersey shore has a lot to offer now."

Pollock says Atlantic City should be optimistic about the future. "It is in a good position right now," he says. "The taxes are relatively low, and there is a consolidation of capital - that is casino properties - all in the one location. Atlantic City is a destination town. It has the gaming, but it has other offerings as well."

That's entertainment

In this Atlantic City is no different from Las Vegas - and indeed Blackpool. As Facenda says, gaming propositions are not just in competition with others of their own kind across the globe. "We are competing with all entertainment offerings," he concludes.

While Blackpool dreams and switches on its illuminations once a year, Atlantic City - like Las Vegas - always keeps the lights burning.

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