George Anastasia is an author and former reporter for the Philadelphia Inquirer. He covered Atlantic City during the start of the casino era.

Thirty years ago, disgraced Atlantic City Mayor Michael Matthews stood in front of a federal judge and pleaded guilty to accepting a bribe from an FBI agent posing as a mobster.

It was 1984. Atlantic City was a boomtown then, just six years into the casino gambling era that was going to remake the shabby resort town that I was assigned to cover as a reporter for the Philadelphia Inquirer.


Every day, I watched as buses from up and down the East Coast dumped thousands of slot machine mavens and roulette table hopefuls at the eight gambling palaces that had sprung up since 1978. Construction was everywhere. So was land speculation. The real estate market was a real-life game of Monopoly. Everyone, it seemed, was flying past Go and collecting their $200.

That included an abashed Matthews, who told the court, “Greed got the better of me.”

Matthews, the first directly elected mayor of Atlantic City, spent about five years in prison. He returned to the Atlantic City area, but was never again a political player. He died in January at the age of 79.

Today, the city itself is in critical condition and the words of the former mayor could serve as its obituary. Greed has done Atlantic City in.

Trump Plaza Hotel & Casino in Atlantic City. | AP Photo

Four of its 12 casinos have closed in the last year, including the Revel, the newest and glitziest, despite a $260 million, taxpayer-funded gift courtesy of Gov. Chris Christie. A fifth, the Trump Taj Mahal, is on the brink. The gaming industry—proponents never call it gambling—has lost nearly 8,000 jobs since the beginning of the year and its revenue, which hit a high of $5.2 billion in 2006, is down nearly 50 percent. Add to that the city’s $65 million budget shortfall, pending layoffs of as many as 300 city workers and a tax base in free fall.

Sure, the still-sluggish U.S. economy is a factor. The loss of the East Coast gambling monopoly that Atlantic City enjoyed for nearly 20 years is another. Poor planning, lack of foresight and the failure to expand the city’s attractions beyond casinos are part of the mix. Even acts of God played a role: Though the city wasn’t devastated in 2012 by Hurricane Sandy the way other Jersey Shore towns were, tourism plunged in the immediate aftermath at a time when the city could least afford it.

But there is something else at play, something in the city’s DNA that is painfully obvious to anyone who’s lived or worked there.

Even during its halcyon days, Atlantic City was an enterprise built around blue smoke and mirrors. Think, Nucky Johnson, the inspiration for HBO’s Boardwalk Empire, and the wide-open rackets of gambling, booze and prostitution during Prohibition.

It was all about grabbing whatever you could, whenever you could from whomever you could. The city worked on a 12-week economy, Memorial Day to Labor Day. Get the tourists and vacationers into town. Sell them the beach and the Boardwalk and then send them home broke. The Miss America Pageant, held in Atlantic City for most of its years, was part of that con. It was the 1920s brainchild of a city huckster looking for a way to extend the summer season for another week. The city was born as a come-on, a fugazy.

Wonder why Atlantic City is failing? The better question, the one asked by people who know the town: Why did anyone think it would ever succeed?

***

If New York is the Big Apple and New Orleans is the Big Easy, then Atlantic City is, and always has been, the Big Hustle. The coming of casino gambling didn’t alter any of that. It just made the pot bigger.

The city was willed into existence in the 1850s by real estate speculators and other investors who turned a marshland then known as Absecon Island into a summer resort. It worked out great for a while. Until the mid-20th century, Atlantic City was the “Queen of Resorts” with elegant Victorian hotels that attracted some 16 million visitors in 1939. Sale of booze (before, during and after Prohibition) and illegal gambling provided entertainment for adults and a lucrative sideline for many hotels.

The lights started to dim after World War II with the advent of interstate highways, less expensive airfares and, later, competition from family attractions like Disneyland. By the 1960s, “Atlantic City had lost its cachet as a tourist destination,” declared a 2009 report by the Philadelphia Federal Reserve Board. (Yes, the Philadelphia Fed actually studied the problem.)

Then things got really ugly: Between 1965 and 1975, the Fed reports, jobs in the city shrank by 17 percent; 40 percent of hotel rooms were shuttered by 1976; unemployment was 18.1 percent in 1977; and tourist revenue plummeted from a high of $70 million in 1956 to $40 million in 1974.

Lawmakers had been pushing for years to introduce casinos statewide—a proposition that didn’t sit well with New Jersey residents. But now they redoubled their efforts. They convinced voters to allow gambling only in Atlantic City and sold the measure as a “unique tool for urban redevelopment.” Blackjack and slots, they promised, would be a catalyst for the revival of a city that at that time looked like Camden or Detroit with a Boardwalk.

As part of the deal, casinos paid a sliver of their revenues to the state for senior citizen benefits throughout New Jersey (this was the “what’s-in-it-for-us” bone thrown to voters outside of Atlantic City) and were supposed to dedicate 2 percent of annual revenues to boost the “health and well-being” of Atlantic City. The latter didn’t happen, thanks to a loophole. Bottom line: six years of casinos, with little or no money for Atlantic City’s revival.

That was fixed in 1984 and casinos since then have paid 1.25 percent of gambling revenues—less than the 2 percent originally envisioned—through the newly created Casino Reinvestment Development Authority. Originally focused on promoting affordable housing in Atlantic City, the development authority was freed in 1993 to invest in a broader array of projects.

Among the results of the $1.5 billion the development authority has funneled into the city since then: a new convention center and railway terminal and a $330 million vehicular tunnel that connects the downtown area to the more lush marina casino zone. But what of the broad-based urban transformation, the better schools, the nicer neighborhoods that gambling money was supposed to usher in? The most painful con of all.

State Sen. James Whelan, who served as the city’s mayor for 11 years and whose tenure was perhaps the only one during the casino era not marred by either corruption or incompetence, points to one staggering statistic that explains the miasma that seems to pervade: Among the year-round residents of Atlantic City—and the population is only 40,000—nearly 70 percent rent rather than own their homes. Most simply don’t make enough from their service-sector jobs to afford homeownership and many who do have chosen to live outside the city. Compare that with the average statewide, where home ownership is about 66 to 68 percent.

Of those who call Atlantic City home, 25 percent are living at or below the poverty level, the 2010 Census shows. The city’s median household income—$30,237—is 60 percent less than the state average and 42 percent less than the national average.

Walk down Pacific Avenue, just a block from and parallel to the Boardwalk casino strip, to get the full picture. Prostitutes still dominate the nightlife and during the day, the homeless line up outside a soup kitchen and the even less fortunate queue in front of a drug rehab center.

Two dozen high-end outlet stores—J. Crew, Banana Republic, Coach, among them—have popped up in a new shopping district at the foot of the expressway but the main downtown commercial strip on Atlantic Avenue is still a hodgepodge of low-end discount stores, pizza parlors and fast-food joints. The city’s only supermarket opened only a few years ago. There is not a movie theater in town. But there are more than a dozen pawn shops and gold exchanges and nearly as many go-go bars and adults-only “entertainment” centers.

Part of the blame for this Mobius strip of misery falls on elected officials and civic leaders who talk a better game than they play—and often play only for themselves. Four members of the five-member city commission went off to jail in a major corruption case in the 1970s. Another mayor was driven out of office after admitting he had lied about his military service, falsely claiming to have been a Green Beret and fraudulently collecting veterans’ benefits. Five years ago the president of city council was jailed in a corruption investigation that included a charge that he had arranged for a prostitute to lure a rival councilman to a seedy motel where their tryst was recorded by a hidden camera. He orchestrated this while out on bail for a separate bribery charge.

***

And what of those, like Christie, who’ve touted Atlantic City as a potential Las Vegas East? It never has, and probably never will, come close.

For as long as it’s been around, Atlantic City has been an easy day-trip for “convenience gamblers.” The pattern was simple: a car ride from Philadelphia, New York, even Connecticut, several hours in front of a slot machine or at a blackjack table and then a ride home. That doesn’t put “heads in the beds,” as hotel industry experts say. Online gambling, which launched last November, has generated modest income— roughly $10 million in September and not nearly enough to make up for the loss of the four shuttered hotels.

And with casinos now in Philadelphia and its suburbs and in half a dozen other nearby locations, those convenience gamblers find it easier and often cheaper to wager closer to home in brand-new gambling complexes rather than in neglected hotel-casinos in Atlantic City, which has grown seedier by the year. No mystery, then, why Pennsylvania is now No. 2 in gambling revenue, second only to Nevada.

Vegas, on the other hand, remains a destination. It’s in the middle of a desert. Most people fly to get there, spend three or four days. Vegas, too, had a decades-long lock on gambling, but unlike Atlantic City, it has constantly reinvented itself—morphing from the low-slung motels of the early days to the Rat Pack cool of the ’60s to the modern-day 24-hour, 365-day extravaganza that features replicas of the Eiffel Tower and Venetian canals. It supplements its six-dozen casinos with an array of nongaming attractions, like Siegfried & Roy’s Secret Garden and Dolphin Habitat and the Shark Reef Aquarium at Mandalay Bay, to keep visitors busy and in town spending money. Vegas has wisely remained paranoid, keenly aware of the competition—even if all the way across the country—and spends $120 million a year on marketing, or roughly four times as much as Atlantic City.

Vegas, yes, is a spectacle that passes for a city, but it keeps itself dolled up to lure money-wielding tourists. Atlantic City smears on a little red lipstick and shrugs.

***

“Atlantic City is dying,” Governor Christie declared in 2010, just after taking office. “The question is, are we going to allow the same doctors who put the patient in this condition to treat the patient?”

Four years later, it sure looks that way.

At the northern end of the Boardwalk, once touted as the high end of the famous walkway’s casino strip, there is a trifecta of failure. In a row sit the Trump Taj Mahal, which is now in bankruptcy and threatening to close next month; the Showboat, which closed earlier this year; and the Revel, the $2 billion boondoggle that also went belly up this fall.

A tentative sale of Revel in a bankruptcy auction was announced Oct. 1. A Toronto real estate development firm has offered $110 million, a pittance, for the property and has indicated it hopes to refit and reopen the casino-hotel. The Taj Mahal is asking for tax breaks from the city and state; on Oct. 17, a bankruptcy judge gave the company the okay to break its labor agreement with the casino workers union. At the end of September, Standard & Poor’s downgraded the city’s credit rating from A-minus to BBB-plus. Moody’s Investors Service had cut the city’s bond rating to junk bond status in July.

This isn’t the kind of rating that attracts serious investors. Vultures, maybe, but there are enough of those in town already.

“Atlantic City has always been a carnival,” Whelan, the state senator, tells me. “That’s what made it attractive.”

It’s also what has made it so difficult to function the way normal municipalities do.

New Mayor Don Guardian, who took office in January, has been given high marks for his enthusiasm and his willingness to face the city’s problems head on. He has called for belt-tightening across the board and has acknowledged that the planned city layoffs were necessary to help avert a looming budget crisis brought on in no small part by the loss of tax revenue from the closing of four casino-hotels.

Guardian has said repeatedly that the city needs to get back its “wow” factor; it needs to be a resort with casinos, not just casinos that happen to be on the beach; it needs to offer visitors more than slot machines and blackjack tables and hangovers.

He seems an earnest guy, but we’ve heard it all before.

Some of the proposals being floated by Governor Christie and other statewide officials are more novel—and a touch crazy. Last month, the governor held a summit to discuss the city’s crisis and has promised state support in developing new strategies. Christie is now encouraging casinos to flaunt federal law and open sports betting parlors—something only permitted in a handful of states, and New Jersey’s not one of them. That’s almost guaranteed to trigger a legal challenge. And on Oct. 14, the Office of the Attorney General announced it was eager to include “skill-based games”—not just games of chance—in its array of online gaming offerings. “Social and skill-based gaming options such as Candy Crush and Words with Friends type games appeal to a new generation of players,” the office gushed.

But the most head-scratching idea has to be the one to allow gambling in other parts of the state, billed as a way to save Atlantic City. Some legislators are talking about changing New Jersey law to permit a casino in the Meadowlands, the sports and entertainment complex adjacent to New York. Part of the tax revenue from that casino, they say, would be used to support infrastructure and non-casino development in Atlantic City.

It’s a 30-year-old impulse—gambling as a unique form of urban renewal—being recycled for a new era of failure. It wreaks of desperation and delusion, like a guy without a cent praying to draw to an inside straight, or hoping to hit the jackpot on the final spin of the roulette wheel, or for that matter, racing to rack up points before running out of lives in Candy Crush. Or it may be another slick sales pitch, just another con. It’s hard to tell. Which is just another of way of saying:

Welcome to Atlantic City.