One of the first things a newcomer to the gambling milieu realizes is that casinos don’t like to close. The reasons for this are obvious—gamblers want to gamble at widely different times and its bad for business not to accommodate them. For that reason any time a casino is forced to close its doors to customers—willingly or unwillingly—it’s a big deal. It happened this weekend in Atlantic City as the local casinos shut down as Hurricane Irene chugged along the Eastern Seaboard after making landfall on the outer banks of North Carolina.
The closure was a coordinated effort directed by Atlantic City Emergency Management. At the behest of this agency the 11 Atlantic City casino properties closed to the public on Friday, with most giving their re-opening time as 12 noon Monday. Most of the properties complied immediately—the exception was the Borgata which initially would only they say were not ‘accepting reservations’ for the weekend. Eventually they clarified this stance, indicating that the property would close at 6 PM Friday.
This is the only the third time in the 33 year history of casino gaming in ‘The Garden State’ that Atlantic City’s casinos have been closed to the public. The first time was due to another hurricane, Hurricane Gloria in 1984 (more about that in a moment). The most recent previous closure was in 2006, when the casinos were forced to shutdown due to a state government shutdown during a budget wrangle. Casinos in Las Vegas or, for that matter, the state of Nevada have never been subject to a mandated shutdown. There are several important differences between the gaming industries in the two states—Nevada is obviously not as densely populated as New Jersey and the casinos aren’t all located in a small geographic area. More importantly, perhaps, the state is well aware that gaming is the economic lifeblood of Nevada while in New Jersey it’s just a small piece of a more diversified economy.
There have been some suggestions that the grave concern over this relatively weak hurricane was unjustified and more a function of media hysterics and political grandstanding than any legitimate threat to the public. While this type of discussion is beyond the purview of this site, there may be some validity to that line of reasoning. In terms of Atlantic City’s gaming industry, there have been dozens of hurricanes and tropical storms to impact the New Jersey coastline in some manner since casino gambling was legalized in 1976. The only previous closure due to severe weather—Hurricane Gloria—was in response to a much more formidable storm. Gloria was classified as a Category 4 storm as it approached the area, though it weakened to a Category 2 as it passed off the coastline. More problematically, it stayed just off land as it moved northward which meant the ‘eye’ of the storm remained intact and the hurricane didn’t suffer any loss of strength which typically occurs after landfall.
By way of contrast, Hurricane Irene was a fairly weak storm long before it approached the Atlantic City area. Even over the warmer waters of the South it was a weak Category 2 storm and quickly fell to a Category 1 as it moved past the Mason-Dixon line. Looking exclusively at the meteorological ‘past performance data’ a good case can be made for the mandated closure being an overreaction. A more likely explanation—in the aftermath of the Hurricane Katrina debacle politicians want to look ‘proactive’ even if it requires creating a crisis where none really exists. A 24 hour news cycle and a competitive media marketplace that is always trying to ‘outhype’ their competitors fuels the notion that what would have been considered a minor inconvenience a few decades ago is some sort of potential Armageddon despite no logical basis for that level of fear.
Estimates from several casino executives put the losses due to this closure at between $3.5 and $5 million depending on the size of the property. Justified or not, the closure is yet another blow to a hard hit Atlantic City gaming economy. Making matters worse, many of the problems in AC may be structural in nature and not merely a cyclical downturn based on the economy. There’s no shortage of competition for gamblers and their money in the Northeast and while Las Vegas was ‘raising the level of their game’ Atlantic City did little to evolve their product mix beyond gaming. Now the low rolling ‘day trippers’ on which they counted for so many years have options throughout the region, while bigger players are more likely to head elsewhere that offers more amenities than just casino gambling.
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