Guest Column: Collapse of Atlantic City casinos a cautionary tale for Miami

Frank Nero is a former elected official from New Jersey at the time voters approved casinos in Atlantic City, and was the CEO of the Beacon Council, Miami-Dade County’s official economic development organization. His guest column highlights the history that casinos had on that city and how Florida should use that as a cautionary tale.


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Collapse of Atlantic City casinos a cautionary tale for Miami

February 27, 2015 

The casino industry is doing all it can to distance itself from Atlantic City as it lobbies for a massive expansion of gambling in Florida.

They push two basic story lines: Jobs and revenues that casinos brought to Atlantic City over the years. And the problems caused by gambling there couldn’t happen here.

The American Gaming Association even has gone so far as to dismiss the economic collapse, and loss of 8,000 jobs, as “the closings of a couple of Atlantic City, N.J., properties.’’

In fact, what happened there is very relevant here because it calls into question the credibility of an industry that could have a significant negative effect on Florida’s economic future.

Atlantic City was a ripe target for the casino sales pitch in the late 1970s. As an elected official in New Jersey at that time, I mistakenly supported the establishment of casinos in Atlantic City. It was in serious decline as tourists had been abandoning it for years. Unemployment was high and neighborhoods were in decay. Casinos promised economic renewal.

The New York Times revisited those promises in an editorial 30 years later:

“When New Jersey authorized casino gambling for Atlantic City in 1977, gambling advocates promised that in time the casinos would help eliminate much of the blight that had long disfigured the city and would improve the lives of its residents…Poor housing, seedy motels and bars, prostitution and drug dealing — all testify to unfulfilled promises.’’

The Times pointed out how casino lobbyists successfully pushed for a change in laws that governed the dispersal of casino revenues, enabling millions of dollars intended for Atlantic City community investment to be diverted to casino expansion projects. An official who wrote the original law allowing gambling there called this a “betrayal’’ of a promise to citizens that casinos had a social responsibility to invest a small percent of their profits into neighborhoods and better housing.

At the time, I interviewed to become executive director of the Casino Reinvestment Authority. After several meetings with industry and local officials, I withdrew my candidacy precisely because of my concerns over this issue.

The Federal Reserve Bank of Philadelphia cited that diversion of casino proceeds in a comprehensive 2009 study that questioned the social and economic value of casinos to local residents.

“Atlantic City’s unemployment and poverty rates are considerably higher than those in the rest of New Jersey and the nation,,,Per capita income in the city is among the lowest in the state…Compounding the situation are a high crime rate, an active drug trade, and gang activity. Vacant houses and lots are a common sight, residents have access to few retail outlets, and the city has no supermarket. Furthermore, the level of non-casino employment has declined significantly.’’

That, unfortunately, is the modus operandi of the casino gambling industry and its insatiable appetite for expansion. Build it, and promise they will come. Then move on to the next state in search of economic salvation, and repeat.

Thirty-eight years ago Atlantic City was the only venue outside Nevada with legalized casino gambling. Today, 39 states have some form of it— and their share of associated problems. Notwithstanding the gambling industry’s protests, Atlantic City’s collapse is far from irrelevant. It’s a cautionary tale.

What we see in Atlantic City is the full life cycle of the impact of casinos on a local economy. We see the casinos cannibalizing local restaurants and retail establishments until they are out of business. We see billions of dollars flowing to out-of-state casino companies with a pittance remaining in the local economy. We see efforts to diversify local economies thwarted.

The casino industry does not want to focus on this clear picture of the impact of casinos, because the results of the failed Atlantic City experiment do not match their talking points.

FRANK R. NERO IS PRESIDENT OF BEACON GLOBAL ADVISORS AND THE FORMER CEO OF THE BEACON COUNCIL, MIAMI-DADE COUNTY’S ECONOMIC-DEVELOPMENT ARM.

To read the piece on the Miami Herald website please click here