I was in Las Vegas last year and visited the downtown section for the first time in a long while. Downtown Las Vegas has traditionally been a poor stepsister to the more famous and glitzy casinos along the Strip. The area had become seedy, crime ridden and its casinos suffered from poor financial performance. Over the years, while the southern Strip was re‐developed, many of the casinos in the downtown area had become rundown and several had closed.
Things have now changed dramatically. Several years ago, the Golden Nugget was purchased and rehabilitated with significant capital investment by a private investor. The main thoroughfare, Fremont Street, was later closed off to traffic and became a major entertainment destination. A major tipping point came when Zappos purchased a building and moved its corporate headquarters downtown. The infusion of young technology employees resulted in the rehabilitation of more buildings, employees living close to where they work, and the opening of several hip and trendy new bars and restaurants.
The results speak volumes about the transformation. Downtown Las Vegas casino gaming revenues and profits are growing at rates not experienced in the gaming industry for several years. Year over year gaming revenues are up over 7 percent vs. 2.1 percent at Strip casinos and compared to a decline of approximately 1 percent at Atlantic City casinos. More importantly, downtown Las Vegas is thriving.
The formula seems to be as follows. First, improve the gaming product. Second, add non‐gaming attractions to expand tourism and visitation. Third, diversify the economy with new industries that have nothing to do with gaming. Fourth, attract young residents into the city. Lastly, let private capital fill in the missing pieces and, presto, a failing urban environment transforms into a vibrant and appealing inner city.
Interestingly, Atlantic City is following along a similar path. Over the last few years, casinos in the city have spent significant capital to upgrade their offerings and feature non‐gaming attractions. Other private investors are stepping up to add additional non‐gaming attractions. South Jersey Gas and Stockton University are also investing in Atlantic City to spur the diversification of the economy and spark an infusion of young people. And the New Jersey Economic Development Agency has incentives available for similar large scale projects.
More is needed. Private developers have purchased failed casinos and malls and are investing in new attractions. Some of these developers have floated some truly zany ideas, and they should be encouraged to bring some of these crazy ideas to life. For example, the owner of Zappos has employees living in micro homes made from shipping containers in downtown Las Vegas, a weird idea that has become part of the renaissance of the downtown area. Atlantic City needs out-of-the-box thinking like that. Imagine if Google or some other technology behemoth were to purchase the former Hilton and turn that into a high tech live, work and play campus. The impact on Atlantic City would be enormous.
Atlantic City is still in the early stages of rebirth and renewal, but things are headed in the right direction. The state takeover appears to have helped ensure the financial stability of the City and a more stable municipal environment. The casino industry has also stabilized, is profitable and, for now, is free from in-state competition. The recent announcement by Hard Rock of the redevelopment of the Taj Mahal is welcome and exciting news.
Other promising new development projects are under way. The pieces are in place for diversification and revitalization. Given the chance, and with strong vision and leadership, Atlantic City might again become an engine of regional economic growth and prosperity.
Email Cory Morowitz, of Galloway Township, managing partner of Morowitz Gaming Advisors and gaming-consultancy consortium GGH, at email@example.com.