Tuesday, September 2, 2014

Revel Closes Quietly as Atlantic City Gambling Declines

The latest Atlantic City casino closing, a few hours ago, went quietly. If what I see on Twitter can be taken as a guide, there were more news reporters than gamblers in attendance in the last two hours at Revel, but it was not a crowd even if you were to gather everyone around the last roulette table. The quiet closing was intentional, I am sure; it would have cost more to close with great fanfare at the stroke of midnight. Maintenance workers cut down the metal “Revel” lettering from the outside at least 12 hours earlier, so the casino already looked closed on its last afternoon.

Revel is one of three casinos to close in Atlantic City this month. It makes good sense that casinos would close in September, at the end of the busy summer season, but it shows how bad things have become that these casinos did not wait for summer’s last hurrah, perhaps around the end of September. One casino closed on Labor Day itself, barely past the peak of summer’s last holiday weekend. The last one is holding out for just two more weekends. If business is this bad, surely at least one more casino will have to close, perhaps next year.

This is not what Atlantic City expected. When the recession hit in 2006, planners and investors assumed it would be a lull of a few years, followed by a new period of onward and upward. Instead, the city’s gambling revenue has fallen to half of what it was in 2006 and is still declining. Revel in particular was an expensive mistake, built during the recession to take advantage of the boom that investors assumed would follow.

This points to an aspect of the business cycle that is a frequent point of confusion. It is a cliché and an an axiom in economics that what goes up must come down. It might seem that the reverse also should be true, but that would not be a safe assumption. When consumers change their habits in an economic downturn, some part of that change is permanent. We have seen this elsewhere lately, in the decline of consumer electronics, TV cable, desktop computers, and mail. In these areas of spending, consumers cut back, and when they found how easy this was to do, they cut back more. I wonder how many former Atlantic City gamblers just don’t have the time to get to the casino anymore and try to pick up some of the same festival feeling in a a fifteen-minute stroll through the local farmer’s market.

There is something else about Revel that may have led it to close while nine other casinos remain open. Its design is mostly 19th-century, with just a few futuristic splashes thrown in. The architects went light on the modern touches, though, apparently afraid they would scare off the high-stakes gamblers if they went too far in that direction. Yet the result looks and feels like an anachronism, a place meant more for a Hollywood version of Mark Twain than for a fun-loving person of the 2010s. When you see the place, you almost want to say, “Can you believe people used to spend hours gambling away their money in places like this?” And of course, that’s the wrong reaction from the point of view of a business that wants customers to spend their money today.