While the voters in New Jersey selected a new governor, the citizens of Atlantic City selected a new mayor. Immediately after being elected mayor, Frank Gilliam proclaimed a new era for the city. The Democrat mayor-elect is replacing the unlucky Republican, Don Guardian who was a one-term mayor whose time in office was marred by a financial crisis. Under his watch five casinos closed and the state took over control of the city’s finances. For Guardian and Atlantic City, it was a tumultuous four years. But it would be unfair to place much of the responsibility for the city’s financial woes on the mayor; Guardian inherited a city under siege. When he took office the casinos in Pennsylvania were eating the lunch of the city’s casinos month after month and year after year. In 2013 the year before Guardian took office, gaming revenues fell 6.2 percent to $2.9 billion. In the six years preceding his first term, gaming revenue fell by nearly 50 percent.
By 2014, the situation had become untenable for the weakest casinos. In January the Atlantic Club shut its doors and by the end of the year three more casinos had gone out of business. It was Don Guardian’s first year in office. The loss of four casinos and the relentless decline in casino revenue created a financial crisis for the city. The city and mayor struggled through 2015 looking everywhere for a ray of hope, but none was to be found. In October 2016, the former Trump Taj Mahal became the fifth casino to close, leaving the city with just seven operating casinos. But things got worse. In November, New Jersey Governor Chris Christie sent in his shock troops to take over the city. Christie argued the city administration did not take the situation seriously enough and failed to make the difficult decisions that needed to be made. The state cut the city’s budget, sold some of its assets, reduced the number of city employees and attacked the city’s employee benefits program. It was a very dark day for Guardian, who had very few good days. There was, however, some good news at the end of Guardian’s time in office. Hard Rock bought the shuttered Taj Mahl and is spending $400 million to refashion it as a Hard Rock casino. Also, online gaming had become a significant source of income for the state and the Atlantic City casinos. In September, online gaming revenue was $20.4 million, up 25 percent. Still, those bright spots were over shadowed by the less than pleasant events that dominated Guardian’s four years in office.
Guardian was philosophical about his loss in the election. He said the city has a new mayor, but the sun will come up tomorrow as it always does and he would go on with his life. In making his comments after conceding the election, he sounded almost relieved. By contrast, the new mayor sounded overjoyed to take the office as he proclaimed a new era for Atlantic City. Gilliam is inheriting a better situation than his predecessor. New Jersey has a new governor. Philip Murphy, a Democrat and former Wall Street banker, is replacing Chris Christie. During his campaign, Murphy promised to end the government takeover of the city. Besides a more favorable governor, the new mayor can look forward to Hard Rock opening in six months and he can anticipate continued growth of online gaming.
However, there are some other things on the horizon that could make the last couple of years of Frank Gilliam’s first term as dark as Don Guardian’s time in office. Philip Murphy said he would support additional casinos outside Atlantic City and closer to New York City. That would not be good for Gilliam or Atlantic City. But, most threatening is a law just signed by Governor Tom Wolf of Pennsylvania. The new law authorizes ten mini-casinos, slot machines at the airports, slot machines in truck stops and online gaming. None of those things will happen in 2018 or maybe even in 2019, but by 2020 Pennsylvania is going to have added significant new competitive pressure on Atlantic City. And to make matters worse, by then, Massachusetts, New York and Connecticut will have additional casinos, too.
Frank Gilliam is not a novice having been on the city council since 2009. But I suspect he does not fully appreciate the importance of Pennsylvania to the financial well-being of Atlantic City. The city is not an island isolated from events in neighboring states. For the first thirty years of the casino industry, the casinos in Atlantic City were alone in a sea of customers. Customers came to the Boardwalk from all up and down the Eastern Seaboard, but the majority of them came from Pennsylvania. The expansion of gaming in the states of New York, Massachusetts, Maryland, Connecticut and even Maine is important to Atlantic City. But no state is more important than Pennsylvania. Frank Gilliam may think it is a new era, a new day in Atlantic City. However, in my opinion, Pennsylvania, not the mayor of Atlantic City controls the destiny of AC and if a new era is dawning, it is dawning in Pennsylvania, not on the Boardwalk.
