The recession hit gambling destination cities Las Vegas and Atlantic City especially hard, but though Las Vegas has been able to recover, Atlantic City has not, due in large part to the lack of diversity of its economy.
According to a study released Monday by Moody’s, Las Vegas casino win revenue has increased 7.2 percent since 2007, while those of Atlantic City are still in decline, as seen in Exhibit 7. The numbers aren’t too surprising. In January, the Atlantic Club Casino Hotel in Atlantic City closed, while the Showboat and Trump Plaza casinos are going to be closing in the coming weeks. Meanwhile, in Las Vegas, an Australian billionaire just bought up 35 acres on the strip across from Wynn complex, and plans to have something up on the land by 2018.
Las Vegas benefits from not having to rely on gambling revenue as much as Atlantic City, with growing construction, health care and tech sectors to bolster its economy. For Atlantic City, gambling is all the city’s got, and its workforce is “concentrated in the contracting gaming industry,” the report said.
Even Vegas casinos are less dependent on gambling revenue than Atlantic City’s. Gambling accounts for only 34 percent for Las Vegas, thanks to cash coming in from retail, hotel rooms, entertainment and conventions, according to the the report. People can go to Vegas to see Britney without spending a penny at the slots. The same doesn’t hold true for Atlantic City, where 78 percent of all casino revenue comes from gambling.
Las Vegas also has geography in its favor. It’s a destination city that attracts tourists from around the world, with no serious competitors nearby. Atlantic City, however, isn’t as lucky. In 2012, 98.3 percent of its visitors came from neighboring areas close enough to drive there by bus or car. It’s a pool of visitors that’s drying up as other Mid-Atlantic and Northeastern states, such as Delaware, Maryland, New York and Pennsylvania, expand their gambling legislation and allow more casinos and options.
The difference in diversity levels is also evident in the cities’ most recent revenue data. While more than three-fourths of Atlantic City’s revenue comes from property taxes, Las Vegas’s rakes in nearly half it’s revenue from intergovernmental sales tax, which includes taxes on things like alcohol, cigarettes and real estate.
The report predicts more of the same for the two cities. Despite the recovering economy, regional gambling has been flat for 18 months across the country, with Atlantic City underperfoming against the national average. Las Vegas, however, “appears to be doing relatively well in terms of gaming revenue performance, which we expect will continue,” the report said.