THE CARDS have been stacked against Atlantic City for years. This resort city in New Jersey lost its casino monopoly in the region when neighbouring states began legalising gambling a decade ago. Gaming revenues have been steadily falling ever since. In 2012 Pennsylvania, which opened its first casino in 2006, edged out Atlantic City to become the nation’s second-largest gambling market. New Jersey no longer holds all the aces. The casino industry is the city’s biggest employer, and roughly a quarter of all jobs are now in jeopardy. Four of Atlantic City’s dozen casinos have already announced plans to close their doors. The Atlantic shuttered in January, leaving about 1,600 people jobless. The 2,100 employees at Showboat Casino on the iconic boardwalk may lose their jobs by the end of the summer, as could the 3,100 workers at Revel, which just entered its second bankruptcy. The latest stroke of bad luck came on Friday when Trump Plaza’s owners announced it may shut its doors in September. Notices went out to its 1,000 employees yesterday.

The city’s leaders have decided to shuffle the deck. In a press briefing on Thursday, Don Guardian, the mayor, John Palmieri, the head of the Casino Reinvestment Authority and Liza Cartmell, who runs the Atlantic City Alliance, the city’s marketing arm, announced plans to turn Atlantic City into a general tourist destination rather than a gambling Mecca. They are keen to woo more business conventions and other trade-group meetings. This is certainly an area ripe for growth: only 6% of the city’s hotel rooms are used for conventions.

Not all the news is bad. More tourists have been coming to the city for concerts and sporting events, and spending on food and retail has increased. Annual non-gaming revenue approaches $1 billion. Yet this is but a splash in the bucket when compared with the city’s former gaming revenues, which reached $5.2 billion in 2006. By 2013 such revenues had fallen to $2.8 billion.

Talk of diversifying the city’s economy is not new. In 2010 Chris Christie became New Jersey’s governor with talk about making Atlantic City more family-friendly, a “Las Vegas East.” He created a commission to look at gaming in the state. A year later he launched a five-year plan to increase conventions, retail and tourism. Last year he gave a tax break to Revel, as the struggling casino had an unusual business model that relied more on revenues from conventions and regular tourists. Non-gambling visitors could easily avoid the casino floor, which until a year ago was also smoke-free. But gamblers fled the casino in greater numbers, and Revel now looks doomed.

Since the 1970s the casinos have delivered essential lucre to New Jersey’s coffers. Atlantic County, which includes Atlantic City, represents 20% of the state’s tourism industry, and tourism is the third-most important industry to the state. To manage Atlantic City’s waning appeal, New Jersey politicians are now seriously mulling a plan to bring casinos to Jersey City, which lies just across the Hudson River from New York City. This would be a big gamble: not only would it involve changing the law and holding a referendum, but also it would further deter travel to Atlantic City.

It is also not clear that more casinos would help. Moody’s, a ratings agency, recently lowered its outlook on the nation’s casino industry to “negative” from “stable”. Gaming was down for 15 of 18 jurisdictions in May. What Atlantic City has that most gaming regions do not have, including Las Vegas, is a fantastic beach with a bustling boardwalk. For all the city’s man-made delights, its place on the sea may be its ace in the hole.

Dig deeper:

Innovative thinking is needed in the City by the Sea (Jan 2013)

New Jersey’s governor has a plan to help America’s playground (Sep 2010)