Atlantic City: The New Las Vegas?
From the Print Edition:
Rudy Giuliani, Nov/Dec 01
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So, the Atlantic City casinos are basically slot machine palaces. The trick for operators is to give them each a distinct personality that will attract a profitable market segment. The Trump properties have decided to draw customers who identify with Donald as a high roller in real life. Harrah's wants big gamblers who are upscale enough to drive up in their own cars, as opposed to the hordes who come by bus. The Tropicana is planning New York-quality restaurants and West Coast-like nightclubs to attract a younger, hipper crowd.
Only Park Place Entertainment, the largest Atlantic City operator, has decided to cover all market segments, from the bus trade to the spa fringe. Park Place was largely put together by Arthur M. Goldberg, a former New Jersey trucking company owner who took over Bally Manufacturing, a debt-ridden maker of slot machines and operator of casinos and health clubs. Then, through wheeling and dealing his way through mergers, Goldberg created a veritable casino empire in Las Vegas, Atlantic City and other locations before his untimely death last year at age 58. In Atlantic City, Park Place runs Bally's, Caesars, Hilton and Claridge, which it bought recently after the previous owners declared bankruptcy.
Goldberg's business approach of drawing all types of gamblers to Atlantic City remains in place. The strategy, according to Scott LaPorta, the executive vice president and chief financial officer at Park Place Entertainment, is based on an appreciation that the Northeast "is one of the most underpenetrated markets in the country." Less than 15 percent of Las Vegas customers come from the East Coast, says LaPorta, "and there are many segments of that gaming population who find nothing to attract them currently in Atlantic City." To change their minds, LaPorta estimates it will be necessary for the local casino industry to invest more during the next five years than it has in the last 15.
The only way that can happen is if New Jersey can become as casino-friendly as Nevada. "In New Jersey, we have noticed a very definite movement among politicians towards working with the industry in a pro-business-like manner," says LaPorta, who is based in Las Vegas. "And it's getting even more so because they recognize that casino operators have alternative places to deploy their capital."
The point man for the casinos in New Jersey politics has always been State Sen. William L. Gormley, an Atlantic City Republican. Since the inception of legalized gambling, he has helped craft nearly every bit of legislation involving the casino induÅtry. His biggest achievement was the creation in 1984 of the Casino Reinvestment Development Authority (CRDA), which collects a 1.24 percent tax on casino revenues and distributes the money to urban renewal projects in Atlantic City and elsewhere in New Jersey. A tall, athletic 55-year-old with graying blond hair, Gormley is as famous for his foul temper as for his imaginative schemes to help the casino industry grow. He interrupts an interview at his offices in a suburban mall to take a phone call and chew out a politician who isn't showing enough support for a Gormley issue. But once the phone call is over, the senator is his smiling, reasonable other self. "There is a constant need to create a positive government environment for the casino business," says Gormley. "The casino operators are sometimes undecided where to put their money: Will it be Las Vegas or Atlantic City? But you give them a tax break and that causes them to lean to Atlantic City."
The senator then explains how to go about convincing legislators and voters -- both Democrats and Republicans -- that what's good for the casinos is good for New Jersey. "What you try to do is come up with programs that have the support of multiple interest groups because they will all be advantaged by them," he says. "I know what it means politically if I generate a billion dollars in more construction for Atlantic City. But if I want to get something done for my district, I start with the needs of other areas." That means giving Newark, controlled by Mayor Sharpe James and the Democrats, a piece of casino revenue taxes and maybe even encouraging casino operators to invest in commercial projects there.
Then it's a matter of tying both ends -- casinos and constituencies -- together. So under the CRDA, the casino operators decide in which communities and even in which projects to invest their tax rebates. "We're putting the industry directly in touch with the towns, without any intermediaries or lobbyists," says Gormley. "It's good for the casino operators because people in the rest of the state see that they are just like first-rate executives in any other business and are willing to invest their tax dollars to improve neglected downtown districts."
Allowing the casino operators to bypass a local mayor and choose how their money will be spent in a community might have turned out to be a hard sell politically. But it helped that Atlantic City, the largest beneficiary of casino largesse, agreed to go along from the beginning of the reinvestment development authority. "Would I rather that the city handle those funds directly?" asks Mayor James Whelan, the independent who has governed Atlantic City since 1990. "Sure I would. But you have to realize what our history has been like." Any recent historical account of Atlantic City would have to prominently mention that four of the previous six mayors ended their careers in disgrace, with several facing criminal charges. "It's not a record any town would be proud of," says Whelan.
Initially casino operators themselves weren't delighted at the prospect of having to take the time to focus on urban renewal projects. But the greater a casino's input, the more it can tailor a project to its benefit. "Take the example of the Trump Taj Mahal," says Whelan. "A couple of years ago, somebody from out of town might have driven to the casino through a couple blocks of abandoned buildings and said, ëLet's get out of this neighborhood.' Obviously, the Taj wanted to see its money used to improve those blocks. Trump's customers are happy. Instead of saying, ëLock the doors,' it's like, 'Wow, this is nice!'"
Back inside the Taj, Tom Fiore is talking again about some of his high-roller customers. "Yes, there are guys who don't know when to stop, and go broke," he says. "But you have players who win as much as they lose." His favorite story is about a 94-year-old who was so cranky that he would walk up to a blackjack table that had been set aside for him and throw the "reserved" sign at the dealer. In an attempt to please him, Fiore once had his favorite meal ready the moment he arrived for dinner. "And would you believe it, he still yells, 'Hey, what's with the service?'" says Fiore. "Anyway, the guy wins $80,000 and he dies in his sleep the next day. Beautiful way to go."
Meanwhile, Friday the 13th is proving unlucky for Harry. At 11 p.m., his stacks of chips are gone. As he collects his Derek Jeter memento and gets ready for the comforts of his penthouse suite, a tall blond at the craps table asks how she can get a Jeter ball. "You just have to lose $100,000," says Harry.
Jonathan Kandell is a frequent contributor to Cigar Aficionado.
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