What Are the Economic Effects of Atlantic City Casino Closing - Research Paper Example

What Are the Economic Effects of Atlantic City Casino Closing Introduction Atlantic City is a well-known tourist destination of the world. The city is particularly popular for gambling center. It is recognized as the second largest gambling center in the US after Las Vegas. The city is popularly called the “Gambling Capital of the East Coast.” Since the year 1978, twelve casinos have been operating in the city while experts in the industry have opined the increasing number of casinos as “overbuilt” (Guelpa, 2014). In the recent years, the owners of these casinos are troubled with the declining casino revenues. Moreover, increased competition from casinos in other cities such as New York, Connecticut, Pennsylvania and Maryland followed by the economic hardship witnessed by the large part of the US have tremendous impact on the revenue earning capacity of the casinos in Atlantic City. As a result, casinos in Atlantic City are in bankruptcy and owners are forced to close out their casinos. It has been reported that four casinos out of twelve closeout lately in this year i.e. 2014 (Bagli, 2014; Karmin et al., 2014; Nash, n.d.). Thesis Statement The closing of casinos in Atlantic City has affected the city's economy, state economy and employment to a substantial extent. In line with this statement, the research paper concisely intends to exploit the economic effects of Atlantic City casino closing. Causes of Atlantic City Casino Closing The major factor contributing towards the closing of casinos in Atlantic City is determined to be plummeting revenues. Numerous factors have been identified that can be attributed with the reducing revenue of the casinos in the city. Few prominent factors are briefly evaluated below. a. Losing Tourist Atlantic City has always been a place of tourist attractions. However, the financial crisis witnessed by the US and the heightened casinos competition have dramatic impact on tourists visiting the city. The numbers of tourist visiting the city has been declining, which has negatively influenced the expectations of casinos owners in the city. In addition, the aging casinos in Atlantic City followed by opening of new casinos in other cities have significantly drawn the attention of tourists towards other cities. One of the major reasons behind increasing competition is that during the financial crisis, many state opened new casinos to increase their tax collection. Notably, intense competition has radically contributed towards the massive fall in gambling revenue of the casinos in Atlantic City (Palmeri, 2014). b. Hotels Atlantic City is the home for magnificent and luxurious hotels. Visitors across the world visit Atlantic City and spend their leisure time with their family members and friends. Nevertheless, the diminishing number of tourists has increased their operating cost while reducing the overall revenue. The failure of the tourism and gambling industry to respond effectively to the changing trend has forced the hoteliers to close out their hotels and casinos. Accordingly, it has been reported that since the year 2006, casinos revenue in Atlantic City has witnessed 50% decline, which has increased the cost of hoteliers and casinos owners to meet the operating needs of the casino business (Berman, 2014; Cohen, 2012). c. Gamblers Economic downturn has adverse impact on the gambling hub of Atlantic City. However, with the opening of new casinos in the neighboring states of Maryland and New York among others has increased the number of casinos while the population of gamblers has remained unchanged with the nominal rise of 1% only. Thus, the saturated numbers of gambler have been distributed to casinos in the other city ending the monopoly of casinos in Atlantic City. As a consequence, the revenue earning capacity of casinos in Atlantic City has diminished to a considerable extent leading towards their closeout (Bryant, 2014). The Economic Effects of Atlantic City Casino Closing The economic impact of closing of casinos in Atlantic City is determined to be a catastrophic. The closure of casinos in Atlantic City is determined to have disastrous financial and economic impact. The ripple effect of closure of casinos in Atlantic City is anticipated to be more amid the city’s workforce. Few major impact of closure of casinos in Atlantic City is determined below. a. Employment Casinos in Atlantic City provide employment to thousands of individuals. Correspondingly, the closure of casinos in Atlantic City has negatively influenced the employment within the city. The shutter of casinos in Atlantic City is estimated to affect the lives of 8000 workers in the city. The massive laying-off of workers is anticipated to increase the reliance of these individuals on unemployment benefits. The lifestyle of these workers is ascertained to witness catastrophic changes particularly due to the closure of casinos in the city. The increasing unemployment has further forced the jobless workers to move in neighboring states in search of new jobs. Compounded with the impact of great recessions as well as Hurricane Sandy, the unemployment status in Atlantic City is ascertained to be at its worse. It is further anticipated that if the same trend continues in the near future, then the unemployment situation in the city will further exacerbate (Bruinius, 2014). b. Small Business The economy of Atlantic City is highly dependent on casinos. Correspondingly, it is determined that closure of casinos in the city is a major setback for small businesses that is directly related to the gambling industry. The closure of casinos has adversely influenced the financial status of the small businesses in the city. Small and cheap hotels in the city are experiencing subsequent impact of falling revenue due to decline in the number of visitors. The local shops are also identified to be witnessing the reduced revenue particularly due to reducing disposable income available with the people in the city. The movement of jobless workers to other city has reduced the consumption of various goods and services thereby exerting significant pressure on the ability of small businesses to generate revenue (Weber, 2014; Sullivian, 2014). c. Taxes Atlantic City also faced tremendous decline in the annual tax received from the casinos due to their closure. The unemployment of 8000 workers and shutter of casinos have caused loss of 2 billion property tax receivable by the city. The impact of closure of casinos has not limited to the city only but the entire State of New Jersey has suffered from the reducing revenue of the casinos. The economic and social policies of New Jersey have witnessed dramatic impact due to the fall in the ‘social security taxes’ and ‘casino property taxes’. The economic development of the city as well as the state has been surrounded with the cloud of uncertainties (NoCasinos.org, 2011). Conclusion Atlantic City is a renowned gambling hub. The city has the second largest number of casinos in the US. Large population in the city is dependent on the casinos for their livelihood. However, in the recent years, the declining revenue of casinos and the economic downturn have adversely influenced the owners of casinos. As a consequent, casinos in the city are in bankruptcy. The opening of new casinos in the neighboring states such as New York, Maryland and Pennsylvania has been identified to impose stiff competition to casinos in the city. Besides, the financial crisis and Hurricane Sandy have also been attributed towards closure of casinos in the city. The ripple impact of casinos closure is further determined to be intense. Thousands of workers are ascertained to be jobless due to closure of casinos. In addition, the city has also suffered with the massive loss of tax arising from casinos and gambling industry. Thus, it can be concluded that there is an urgent need to address the issue in order to prevent any further worsening of the economy status of the city. References Bruinius, H. (2014). Revel Casino closes: why lights on Atlantic City boardwalk are dimming. Retrieved from http://www.csmonitor.com/USA/2014/0902/Revel-Casino-closes-why-lights-on-Atlantic-City-boardwalk-are-dimming-video Bryant, N. (2014). Atlantic City: decline in the US gambling centre. Retrieved from http://www.bbc.com/news/world-us-canada-29226159 Bagli, C. V. (2014). Atlantic City strives to rise as casinos fall. Retrieved from http://www.nytimes.com/2014/07/15/nyregion/as-casinos-start-to-fall-atlantic-city-struggles-to-rise.html?_r=0 Berman, M. (2014). Trump plaza is closing. This is just the latest sign of Atlantic City’s dramatic decline. Retrieved from http://www.washingtonpost.com/news/post-nation/wp/2014/07/14/trump-plaza-is-closing-this-is-just-the-latest-sign-of-atlantic-citys-dramatic-decline/ Cohen, J. (2012). Boardwalk vampires. Retrieved from http://www.newrepublic.com/article/politics/magazine/110217/boardwalk-vampires Guelpa, P. (2014). Atlantic City, New Jersey casino to close, sign of worsening US jobs crisis. Retrieved from http://www.wsws.org/en/articles/2014/07/14/casi-j14.html Karmin, C., Brickley, P., & Dawsey, J. (2014). Casino herd thins in Atlantic City. Retrieved from http://online.wsj.com/news/articles/SB20001424052970203708204580143541755707922 Nash, J. (n.d.). Atlantic City’s casino closings have far-reaching effects. Retrieved from http://www.paradigmtax.com/pdf/Atlantic_Citys_Casino_Closings_Have_Far_Reaching_Effects.pdf NoCasinos.org. (2011). Grand closing of three Atlantic City casinos begins Sunday. Retrieved from http://nocasinos.org/grand-closing-of-three-atlantic-city-casinos-begins-sunday/ Palmeri, C. (2014). Local casinos are a losing bet. Retrieved from http://www.businessweek.com/articles/2014-04-03/casinos-close-as-revenue-falls-in-gambling-saturated-u-dot-s Sullivian, S. P. (2014). Casino closings in Atlantic City may diminish N.J.'s tourism economy. Retrieved from http://www.nj.com/atlantic/index.ssf/2014/09/casino_closings_in_atlantic_city_may_diminish_njs_tourism_economy.html Weber, J. (2014). Will Atlantic City casino closings make Christie '16 bid more of a gamble? Retrieved from http://www.foxnews.com/politics/2014/07/16/will-trump-casino-closing-other-atlantic-city-woos-burden-christie-potential/ Read More