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Atlantic City betting on diversification – Business Observer

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An Atlantic City casino industry that was already facing headwinds from increased competition in the 2010s is facing new pandemic challenges this decade that underscore the need for greater economic diversification.

While the volume of casinos has started to rebound of late, revenue from in-person visits has declined 9.7% in the first eight months of the year, compared to the same period in 2019, according to data. recent from the New Jersey Division of Gaming Enforcement (DGE). Employment at Atlantic City’s nine casinos is also down nearly 6,000 jobs from summer 2019 levels, according to the latest CEO employee report from July.

It also gets worse once you zoom out.

Jane Bokunewicz, coordinator of the Lloyd D. Levenson Institute of Gaming, Hospitality and Tourism at the University of Stockton, noted that despite recent gains in traffic at casinos, non-gaming resort amenities such as accommodation, restaurants, shopping and entertainment have been much slower to regain strength. Casino hotels have been largely hampered by losses in live conferences, meetings and trade shows, which Bokunewicz says will likely be the last to fully recover from the health crisis.

“As health concerns ease, efforts to expand Atlantic City’s resort product beyond gaming should bear fruit as visitors seek in-person experiences and resume group gatherings,” Bokunewicz said. “However, to take advantage of a truly diverse economy – one that is even more resilient to impacts on the gaming, hospitality and tourism industry – Atlantic City will need to cultivate businesses that are completely independent of seasonal visitors.”

The COVID-19 pandemic struck as Atlantic City was in the midst of a five-year state takeover that took effect in November 2016 under the Municipal Stabilization and Recovery Act signed by the government of the day. Chris Christie following a near default in the city’s debt. Under state intervention, Atlantic City successfully settled $ 137 million in casino tax appeals owed to Bally’s Corp., Caesars Entertainment, Golden Nugget Hotels & Casinos, Harrah’s Entertainment and the Tropicana, as well as at the Trump Taj Mahal and Trump Plaza, through $ 72 million. municipal bonds issued under the New Jersey credit enhancement program.

In brighter times, a dozen thriving casinos fueled Atlantic City’s economy. Then, new competitors in the surrounding northeast, such as the Sands Casino Resort Bethlehem in Pennsylvania, began to take on the Jersey Shore gambling destination.

The 2008 financial crisis did not help. Five casinos closed between 2014 and 2016 before the seaside town reduced the total number of its gambling properties to nine in June 2018, with the opening of the Hard Rock Hotel & Casino Atlantic City and the Ocean Casino Resort.

Ben Dworkin, director of the Rowan Institute for Public Policy and Citizenship at Rowan University, said it will take time for Atlantic City to regain its pre-pandemic position with casinos and hospitality. He said the city should, however, receive a boost from the League of Municipalities of New Jersey which chose to hold its annual conference at the Atlantic City Convention Center and Jim Whelan Boardwalk Hall in November after hosting an event. virtual last year.

“It’s significant that the League of Municipalities, which is hosting one of the biggest conventions of the year, is returning to Atlantic City,” said Dworkin. “We’ll see if the attendance is the same as it was before the pandemic and the league is establishing their own COVID protocols, but they can go to restaurants and spend the money, and that’s part of the rebuilding.”

Just last week, the New Jersey Cannabis Convention, for those working in the cannabis cultivation niche, announced that it will be held for two days in October at the Showboat Hotel in Atlantic City.

Prior to the pandemic, Atlantic City had begun to expand its business activities beyond traditional gaming, including hosting an 85,450 square foot Bass Pro Shops outpost and a 16,000 square foot mixed-use development of BET Investments in next to the Promenade Hall. South Jersey Gas has also built offices next to a new University of Stockton satellite campus which debuted in 2018 and is home to the school’s hospitality program.

The main Stockton campus, located in the neighboring township of Galloway, has proactively tried to improve Atlantic City’s economy since it arrived three years ago. This included signing an agreement in June with the New Jersey Economic Development Authority (NJEDA) to establish an esports innovation center on its new waterfront campus with the goal of making Atlantic City a hub for the growing industry.

Joshua Garay, real estate broker and founding director of JSG Realty in Manhattan, which represents the owners of the closed Atlantic Club Casino, said Stockton’s $ 500 million investment in its neighboring campus was a positive factor for stimulate demand for new development opportunities. . He said the property he now markets at 3400 Pacific Avenue, which was originally developed by Steve Wynn in 1980, is attracting major interest from multi-family developers looking to create new condos or homes for luxury elderly.

“We have responded to calls from luxury housing companies, senior housing companies and residential developers all looking to buy the property,” Garay said. “There is also a strong demand for condo developments on the Jersey Shore as buyers look to escape the cities and spend more time working remotely from a beachfront location.”

Garay added that Atlantic City should not seek to add more casinos, given the increase in online options now available for gambling and sports betting.

Another offer to boost Atlantic City’s non-casino economy is developer Bart Blatstein’s plan for a $ 100 million indoor water park on land adjacent to the Showboat, which he acquired in 2016 for $ 23 million. dollars. The Atlantic County Improvement Authority plans to issue $ 95 million in municipal bonds to jumpstart the project, which was hampered by delays during the pandemic.

Bokunewicz said attracting more business development in areas such as healthcare, education and green energy would help attract more full-time residents to Atlantic City, which has seen its population drop by 2, 7% in the 2020 US Census, compared to 2010, at 38,497.

She noted new business investment near the boardwalk before the pandemic, coupled with the city’s popular concert series and the debut of American Basketball. The Association’s Atlantic City Seagulls franchise gives hope for a sunnier economy which, in turn, will lead to future real estate development.

“While the pandemic has in some ways slowed that momentum, it hasn’t stopped it,” Bokunewicz said. “These advancements have the potential to further perpetuate a development cycle for the city – one that the city is uniquely positioned to capitalize on as one of the few coastal towns in the northeast with an inventory of vacant properties and underused ready to be refitted. “

Andrew Coen can be contacted at acoen@commercialobserver.com.


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