Are New York City Casinos a Real Threat to Atlantic City's Survival?

Atlantic City casinos brace for competition as New York City eyes gaming expansion. (C: John Van Decker / Alamy)

From the moment Resorts International (now Resorts Casino-Hotel) opened its doors on May 26, 1978, the New York City/Northern New Jersey region has been a crucial “feeder market” for Atlantic City’s gaming industry. 

Jim Allen, chairman of Hard Rock International/CEO of Seminole Gaming, which owns Hard Rock Hotel & Casino Atlantic City, one of the town’s most successful properties, has estimated that the southern and western parts of the New York metro area are responsible for 20 to 30 percent of AC’s brick-and-mortar revenue.

As such, there is currently a good degree of justifiable fear and paranoia in Atlantic City caused by the looming introduction of up to three casinos in New York City. Not surprisingly, a number of top gaming entities, including three - Hard Rock, Caesars Entertainment (which is partnering with Roc Nation, rap titan Jay Z's entertainment conglomerate) and Bally’s - that operate in Atlantic City are staking claims on various sites in Manhattan as well as the “outer” boroughs, Yonkers and Long Island. 

Also in on the modern-day gold rush are, among others, New York Mets owner Steve Cohen, the famed Sax Fifth Avenue department store and gaming titans Resorts World, Wynn Resorts and Mohegan Sun.

All have pledged to build opulent pleasure domes, most of which would likely outglitz anything Atlantic City has to offer (some plans have casinos as the anchors for multi-use developments that include retail, hotel, and residential elements). So, the uncertainty and dread that permeate Atlantic City operations are merited.

Or are they?

According to a recent article in the New York Post, the danger to AyCee’s economic lifeblood may not be as acute as believed by many in the seaside resort’s gaming industry.

The Post article’s thumbnail sketches of each proposed New York project include their “pros” and “cons.” And the funny thing is that the story indicates that each and every project submitted for municipal approval is facing some degree of pushback that apparently casts legitimate doubts on their ability to be approved.

Per the Post, several concepts have engendered significant resistance from those who live near the proposed sites. Other projects are meeting with political opposition. And one—a proposed gaming hall encompassing several upper floors of the Sax Fifth Avenue building in midtown Manhattan—is considered a long shot because of its next-door neighbour, which just happens to be St. Patrick’s Cathedral, arguably the most iconic Catholic Church in the United States.

St. Patrick’s Cathedral might soon have a new neighbor—a casino at Saks—but not everyone’s on board. (C: JEROME LABOUYRIE / Alamy)

Perhaps most significantly, the one identified by the Post as most likely to get the nod is the Las Vegas Sands’ complex on Long Island east of Manhattan and Queens. Trust me, if you live in North Jersey, getting there is not more convenient than going to Atlantic City (except maybe between the hours of midnight and 6 a.m.). 

You could be half-way to AC by the time you get across the Hudson River, and you’d still be at the mercy of the usually brutal New York City traffic (it once took me three-and-a-half hours to drive the 20 miles from midtown Manhattan to the Merchant Marine Academy, which is also on Long Island, about 15 miles northwest of the Las Vegas Sands site).

What this all means is that at some point, the New York City area is going to get at least one—and likely three—casinos that could conceivably impact Atlantic City’s gambling operations; the worst-case scenario put forth by some insiders and observers is that as many as three casinos could be forced out of business.

But that’s not happening anytime soon. A number of potentially contentious license-approval hearings await the New York hopefuls. And once the winners are chosen, there’s no guarantee any or all will ever welcome the public—at least not in the foreseeable future. 

Could New York casinos follow the Cosmopolitan’s 18-year path to completion? (C: Barry King / Alamy)

Remember, it took the Cosmopolitan in Las Vegas 18 years from the time the project’s official announcement was made until the first customers walked through the doors. All it takes is one sharp economic downturn and the billions needed to build a New York City casino will dry up like a lake in a drought.

Should Atlantic City operators be concerned? Of course. To not be constitutes something akin to criminal neglect, considering what’s at stake down there (starting with the loss of thousands of jobs). But there are some encouraging aspects to this somewhat discouraging prospect.

As noted above, one is the lack of easy access to New York gambling parlors that gamblers in northern New Jersey would face. Another is that those who run the oceanside gambling empire in southern New Jersey have some time to conjure ways of minimizing—if not mitigating—the negative effects New York City casinos could and logically would have. It won’t be easy, but AC's gaming industry needs to figure out ways to keep attracting visitors in the event of a thriving New York gaming industry.

The good news is that it has at least three years, possibly more.

The threat to Atlantic City from the north cannot be dismissed. But a "Chicken Little" approach to that threat is neither helpful nor necessary at this point; panic will only serve to make things worse. 

What’s required are rational consideration of the issues and, perhaps, some out-of-the-box thinking on the part of local executives and their corporate overlords.

Atlantic City’s 45-year history of legal casino gaming is filled with instances of self-inflicted wounds. The last thing the city and its gambling industry need is more.