By Karina Velter, Attorney
Atlantic City is in trouble, with three casinos (Showboat, Revel and Trump Plaza) recently closing in September, over 8,000 people will be out of jobs. The city that began the year with twelve casinos is down to eight. (Atlantic Club closed its doors in January 2014).
The Trump Taj Mahal may be next. The 24-year-old Boardwalk casino could be headed for a Chapter 11 reorganization within days. The casino has broken certain loan covenants and without a workout with its creditors, may be soon to join their sister casinos in the unemployment line. The Taj is the second largest casino, employing approximately 5,000 people until recently. The closing of this casino will cause Atlantic City’s unemployment rate to soar through the roof.
Analysts attribute the closures to a combination of several factors. Due to the increasing competition from casinos in neighboring states (Pennsylvania, New York, Connecticut and Maryland) gamblers no longer need to travel to Atlantic City. Additionally, there is growing poverty in the area. Atlantic City has a 13% unemployment rate (more than twice the national rate), which is sure to increase in light of recent events.
Casino analysts posit the closings are actually a positive thing. They hypothesize that with less competition the remaining casinos will be more profitable and create more revenue for Atlantic City.
However, in the immediate future, the closing of these casinos will have a tremendous negative impact on the local businesses in Atlantic City as well as the surrounding towns. The significant decline in traffic will affect the retail stores and local restaurants in the area as well.
With the escalating unemployment rate coupled with the potentially doomed local businesses, there is a strong likelihood that New Jersey foreclosures and bankruptcy filings will be on the rise in the not too distant future.