The closing on Monday morning of the Trump Taj Mahal, the last of four Atlantic City casinos that once bore Donald Trump's name, is big news, mostly because of its namesake's notoriety. A union/management imbroglio led majority owner Carl Icahn to shutter the property; the Republican presidential nominee lost control of the casino more than a decade ago and tried unsuccessfully to get his name taken off the property.
Behind the campaign-related headlines, though, the end of the Taj--a tragedy to its nearly 3,000 employees and an economic drag on an already struggling resort town--underscores the mistakes that too many including Trump have made in Atlantic City. Even when the city was the hottest gambling destination in the world, it never built a sustainable path from its past to a prosperous future. Trying to base your economy on gambling alone is a lot like gambling itself: The odds, long term, are against you.
Since its founding in 1854, Atlantic City had enjoyed several incarnations--high-end health resort, entertainment mecca, Prohibition playground, wartime recuperation center--before falling on hard times in the 1960s. Unable to compete with fresher resorts and with deteriorating facilities, the city seemed doomed.
Then a savior arrived: legal gambling. Forty years ago in November, New Jersey voters approved a referendum that legalized casino resorts only in Atlantic City, because, they were told, it would revive the dying seaside resort. With near-guaranteed profits from the tables and slot machines, casinos would make the investments in rooms and infrastructure that would enable Atlantic City to reclaim its leisure and business travelers.
At first it worked. By 1981, their third full year of operation, Atlantic City casinos had cracked the $1 billion mark, a milestone that took Las Vegas decades. Within two years the city's casinos were out-earning the Las Vegas Strip's, as they would continue to do until 1999. Not that there weren't problems. Despite the enormous profit potential, several properties went bankrupt, changed hands and suffered regulatory setbacks.
Trump arrived in Atlantic City as a Manhattan wunderkind in these heady years, promising to bring his sure touch to a partnership with gambling veteran Harrah's on the Boardwalk. But that alliance frayed and then broke, leaving Trump in sole control of the erstwhile Harrah's at Trump Plaza, which closed in 2014.
Atlantic City became a major part of the Trump empire, which at its peak put his name on one-third of the city's casinos. In 1990 Trump opened Trump Taj Mahal, then the city's largest, to great fanfare. The project had been started years earlier by the owners of Resorts International; Trump had plucked the unfinished gem and completed it, creating more than 5,000 jobs, drawing in more taxes for the state and making another public relations splash for a city that already was being eclipsed by Las Vegas, which was re-inventing itself as a high-end destination for more than just gambling.
The Taj won more from gamblers than any other Atlantic City casino from its 1990 opening until the 2003 opening of the Borgata. It dipped into bankruptcy more than once, but by the Great Recession, that was almost a rite of passage for Atlantic City casinos, which won $5.2 billion in 2006 when 12 were in operation.
Then the wheels fell off, both for the resort and Atlantic City. It was a completely foreseeable disaster: An ever-constricting ring of competition from legalized casinos in nearby states (Connecticut, 1993; Delaware, 1996; New York, 2004; Pennsylvania 2006; Maryland, 2011) choked off the supply of gamblers, leading to a decade of still-ongoing decline. Last year Atlantic City's gaming win was down to $2.6 billion. Since 2006 five of the city's casinos have closed. On Monday, the Taj made it six.
Trump's legacy in Atlantic City is tied to a bigger question: Did casino gambling, in the end, deliver on its promises?
In Richard Armstrong's excellent novel God Doesn't Shoot Craps, a character selling a gambling system says to a buyer upset that he has lost with the system: "It's a gambling system. It wins sometimes and it loses sometimes. In the long run, it will probably lose more often than it wins. That's how they can afford to have volcanoes outside."
Looking back 40 years, it seems that Atlantic City's casino-based redevelopment was much like one of Armstrong's gambling systems: It worked sometimes, and it didn't work sometimes.
The casinos did what they promised, creating jobs and boosting state coffers. They couldn't and didn't promise that surrounding states wouldn't soon get the same idea. The city should have taken a hint from Las Vegas and diversified more vigorously. Some big casinos broadened their offerings, but many didn't. Unlike Las Vegas, Atlantic City never developed a critical mass of non-gambling attractions--think Cirque du Soleil, Celine Dion and celebrity chefs.
Trump's investments in Atlantic City sometimes won and sometimes didn't. Swooping in to buy Hilton's regulator-stymied marina project for $320 million (beating rival Steve Wynn) and opening it as Trump's Castle in 1985 seemed like a win, with the added sweetener that it was adjacent to his former Boardwalk partners, Harrah's. Selling it in 2011 for $38 million (to Tilman Fertitta's Landry's, which transformed the property into the Golden Nugget) after failing to close a $316 million sale was a case of letting the same bet ride for too long.
In the end it wasn't just tougher competition and shifting markets--or even labor disputes, the proximate cause--that did in the Taj or Atlantic City as a gambling destination. From the start, one of the high points of the Taj was to be its integration into Steel Pier, another once-great Atlantic City amusement center, via a Boardwalk-spanning bridge between the casino and the pier itself. With floor-to-ceiling windows its entire length on both sides, the space would be a show-stopping restaurant with stunning views of the Boardwalk and beach.
It never opened. It was never finished, I was told, because "they" ran out of money.
Financial risk-taking won Trump the Taj Mahal. His drive and hyperbole got it open and made it a winner. None of that, though, was enough to keep it moving forward. If one closed casino can be a metaphor for Atlantic City or a warning to America, let the bridge restaurant remind us that it's not enough to keep betting on what's won in the past. Instead, we must focus on the work of quietly completing the bridges, literal and metaphorical, that we have allowed to remain unfinished.
Editorial on 10/16/2016