Wednesday, May 7, 2003 | 9:41 a.m.
ATLANTIC CITY -- It was a desperate gamble, by a desperate city: Bring in casinos to reverse the fortunes of a seaside resort with a rich past but no future.
Twenty five years later, people say the gamble has paid off, even if it didn't turn the city into Monte Carlo.
Once known for its boarded-up storefronts and outdated hotels, much of Atlantic City now hums with activity: Giant, neon-trimmed casino hotels line the Boardwalk, buses packed with gamblers stream into town by the hundreds every day and "cash for gold" shops along Pacific Avenue lure the unlucky ones who crap out at the tables.
The old Atlantic City High School building is gone, replaced by an $83 million bayfront complex on the outskirts of the city. There is also a new bus terminal, a new police station, a minor-league baseball stadium and 1,500 units of new housing -- all built with the help of casino taxes.
Once hampered by a 10-week summer season that revolved around day-tripping beachgoers, Atlantic City has been transformed into a 24-hour-a-day adult Disneyland where the roulette wheels never stop spinning.
Casinos have rejuvenated the once-decrepit Boardwalk, pumping $7 billion in capital investment, creating more than 45,000 jobs and generating millions of dollars in ancillary business, from linen companies to food vendors.
Casino taxes, meanwhile, have funded dozens of projects in Atlantic City in addition to underwriting a prescription drug program for New Jersey seniors and helping build day care centers, YMCAs and a Vietnam Veterans memorial -- among other things -- in other parts of the state.
The change has not been quick, or all good: Redevelopment of the city has lagged away from the Boardwalk, leaving some neighborhoods still marred by shabby rowhouses and glass-strewn vacant lots.
Unemployment continues to plague the city. Last year, the jobless rate averaged 11.4 percent, well above the state average of 5.4 percent.
But most people believe casinos saved Atlantic City from a slow death.
"Casinos put money in everybody's pockets -- all races, creeds and colors," said florist Charles Fischer Jr., who credits casinos with saving both the city and his Pacific Avenue business. "All you need to do is go through the town to see that it has worked."
Famous for its beaches and boardwalk, Atlantic City was on the decline through the 1950s and 1960s as air travel, backyard pools and the prevalence of air conditioning eroded the demand for summer escapes to the shore.
The Boardwalk's grand hotels had fallen into disrepair, and the tourist trade that once made the beach, the Steel Pier and the 500 Club must-see attractions was now nearly gone.
Seizing on an idea floating around since the late 1950s, a group of Atlantic City-area businessmen decided in 1974 to make a concerted effort to bring in casino gambling to stop the bleeding.
Campaigning across the state, they told voters casinos would mean jobs, tax revenue and new life for the city that gave birth to Miss America, saltwater taffy and jitney buses.
A ballot measure permitting casinos was defeated that year, but the Atlantic City supporters -- under the name The Committee to Rebuild Atlantic City, or CRAC -- didn't give up, refining their message by promising that the state's share of the pie would go toward senior citizen programs.
"Casinos, yes. Atlantic City only!" read the bumper stickers.
On Nov. 2, 1976, New Jersey residents voted 57 percent to 43 percent to allow gambling. After that, the state adopted a strict regulatory code aimed at keeping the mob out, the gamblers in and the people of New Jersey sharing in the profits.
In an appearance on the Boardwalk the following summer, then-Gov. Brendan Byrne voiced the concern many people had about casinos, warning mobsters against trying to muscle in on the action: "I've said it before and I will repeat it again to organized crime: Keep your filthy hands off Atlantic City. Keep the hell out of our state!"
The casino era began on May 26, 1978, when the former Haddon Hall hotel reopened as Resorts International Hotel Casino. Hungry for action, gamblers lined the Boardwalk waiting to be admitted, a scene that repeated all summer, since Resorts was the only casino in town for a year.
"It's here," The Press of Atlantic City newspaper reported the next day. "The wheels are spinning and the dice are rolling and the coins are clinking and the grand old dame Atlantic City has a saucy swivel in her hips she never had before. The city will never be the same again."
Over the next 12 years, casino companies built new hotels and renovated old ones, hoping to tap into the surprising demand that Resorts' success reflected.
Now, the city has 11 casino hotels that win $4.2 billion a year from gamblers and account for the estimated 37 million people who visit annually. A twelfth is scheduled to open this summer.
By law, they had to have at least 500 rooms and provide amenities, including restaurants, meeting rooms, spas and other non-gambling diversions.
But the results were self-contained pleasure palaces, providing everything a gambler could want and making it unnecessary to venture outside and patronize local businesses. Even employees were fed for free in the casinos and required to park in employee parking lots located outside of town.
As a result, some city businesses were bypassed entirely by the casino-era boom.
Other aspects of the casino law were aimed at protecting gamblers from themselves, and from the casinos.
Originally, the casinos could only stay open from 10 a.m. to 4 a.m. weekdays, and 10 a.m. to 6 a.m. on weekends, the idea being to give time for gamblers to step back from the tables and cut their losses. It wasn't until 1992 that the state allowed casinos to remain open around-the-clock.
Booze could be served for free, but never hawked as such, under the assumption that casinos shouldn't be allowed to ply gamblers with alcohol and take their money.
Up until last year, cocktail servers were permitted to say only "Coffee? Juice?" as they walked the casino floor, even though they could serve beer, wine and whiskey if asked.
Meanwhile, the Monte Carlo-style elegance envisioned by those who promoted casinos before the referendum proved elusive. Resorts, which initially required jackets on men, quickly gave up after providing them to those who showed up in shirt sleeves.
And slot machines -- which voters were originally promised wouldn't be permitted -- now make up nearly 70 percent of the casinos' business.
One of the casino era's biggest successes, supporters say, has been New Jersey's ability to keep casinos free of mob taint.
For years, the state mandated criminal background investigations for every casino employee from CEO to chambermaid, and strict scrutiny of vendors who did business with the casinos.
Would-be casino owners faced the toughest scrutiny: Hilton Hotels Corp. and Hugh Hefner -- among others -- were at least initially found unsuitable to hold casino licenses because of past associations with characters deemed unsavory by regulators.
That diligence has kept organized crime out of the casinos, a feat no one would have bet on, given the history of corruption in New Jersey and mob control in Las Vegas casinos.
Two mayors in the casino era -- Mike Matthews and James Usry -- were indicted while in office, although neither's alleged crimes involved the casinos.
"We had political scandals over that time, but there never was one that involved the casinos," said ex-Mayor James Whelan. "Had something occurred in 1980 or 1981 where someone was trying to bribe someone, you'd have a different landscape for gambling in this country now. Atlantic City showed you could have a clean industry."
Some small businesses did flourish, even if the transition was rocky.
Fischer Flowers, which was founded in the 19th century and maintained a store in Resorts International, was kicked out soon after the casino opened. But the increased work for trade shows, conventions, private parties, high-roller suite decoration jobs and other casino-related functions helped it thrive, according to Fischer, 75.
"The casinos definitely helped us, and they provided the needed first-class hotel rooms to bring back the convention activity that had deteriorated all through the '60s and '70s. When new rooms came back, conventions returned and that improved our business," he said.
Martin Wood, who owns Wood's Money to Loan pawn shop, smiles when asked about what Atlantic City used to be, before casinos.
"There was no 'used to be,"' he said. "We had no department stores, no nightlife, no movie theaters. Casinos have been a boon to Atlantic City, I don't care what anyone says."
Certainly, his Atlantic Avenue storefront has flourished, as tapped-out gamblers come to him to pawn wristwatches, clothing or whatever else they can so they can resume their betting.
"I hear these stories all night long," said Wood, 67. "One guy's sitting here telling me how he was up $10,000 at 2 a.m., and now it's 9:30 and he's in here and he hasn't got a cent."
Crime increased, just as opponents predicted.
The number of purse snatchings, assaults, rapes, robberies and murders skyrocketed after casinos opened, although city officials point out that crime rates are calculated on a per-capita basis, which they say is an unfair barometer given that Atlantic City gets the equivalent of 37 million visitors a year.
FBI statistics show the crime rate per 1,000 residents went from 134.3 in 1978 to a peak of 450.3 in 1988.
"The people of Atlantic City gambled 25 years ago when they went for this," said the Rev. Tom Grey, a minister who heads the National Coalition Against Gambling Expansion, in Rockford, Ill. "What I want is for them to stop and say 'At what price?'
"The argument is look at all these jobs and all this money. But there are tradeoffs. You become a casino town. Your mayors are corrupt. You're used around the country and the world as a bad example of gambling," Grey said.
He says casinos may have saved Atlantic City from further deterioration, but that there should be a higher standard for assessing their success here.
"If it's a difference between Atlantic City floating into the ocean or still being there, it's a negative way to make the case. If that's the best you can do, after all the billions that have come through there, it's not a success," Grey said.
At the same time, the Atlantic City experiment has been cited as a model by other jurisdictions that tried their luck at casino gambling to prop up state coffers or stimulate development.
Even critics acknowledge that casinos -- each of which employs 3,000 to 4,000 people -- have become an economic engine for the region, reaching Pennsylvania, Delaware and New Jersey.
"Before casinos, it was horrible," said union leader Robert McDevitt, a former bartender who heads Local 54, which represents 15,000 casino workers. "We had a summer season but no prospects of work the rest of the year. As a kid growing up here, you could either be a teacher, a cop or a city worker, but after that, that was about it."
Now, he says, jobs are plentiful and the pay and benefits are good, even for the lower-level casino positions. A housekeeper or public area attendant makes between $18,000 and $30,000 a year, plus pension, severance and health benefits.
"I live down near Showboat (Casino Hotel), and every one of my neighbors works. They may be washing dishes, waiting on tables, but they're feeding their families. And after they're done renting, they're buying homes," McDevitt said.
Betty D'Andrea, 49, was working at the tax office in neighboring Brigantine when she and three girlfriends applied for jobs at Resorts in 1978.
She was hired as a dealer -- at more than twice her City Hall salary -- and has worked there ever since. She met her husband on the job. Now, they work opposing shifts -- she from 4 a.m. to 12 noon, him from 12 noon to 8 p.m.
"He's home for breakfast and getting the kids on the bus, I'm home for homework and dinner. We never needed a sitter," she said.
The benefits of casinos have been felt far beyond the kitschy Boardwalk.
The state's 8 percent tax on each casino's annual gross revenue, which generates about $437 million a year, has funded the Pharmaceutical Assistance to the Aged and Disabled. The program, which serves about 198,000 seniors and disabled New Jerseyans, pays for all but $5 of each prescription drug purchase.
Casino taxes also underwrite Lifeline, a state program that provides utility bill aid for those who qualify. About 175,000 state residents get $225 per month to help pay for heat or electricity.
Meanwhile, the state Casino Reinvestment Development Authority, funnels the money from a separate 1.25 percent tax on casinos into redevelopment projects in Atlantic City and elsewhere.
While the casinos provide a livelihood for thousands, they sometimes do so on the backs of gamblers who get hooked on the lure of the cards.
"Compulsive gambling is a major player," said Edward Looney, executive director of the Council on Compulsive Gambling of New Jersey. "If all the compulsive gamblers stopped going to Atlantic City, 25 to 40 percent of the business would be lost. If you know that, how can you in good conscience stay in that business? By educating people about how to recognize the signs and symptoms, which some casinos do but others just give lip service to."
Looney blames New Jersey's failure to impose loss limits, casinos' willingness to give credit and the elimination of gambler-protection measures such as the ban on hawking alcohol and the hours restriction.
Studies by SMR Research Corp., of Hackettstown, in 1997 and 2001 found a link between the presence of casinos in an area and higher personal bankruptcy filing rates for that area.
In Atlantic County, where the Atlantic City casinos are located, bankruptcy filings -- and the rate of growth in filings -- were both about double the New Jersey average for the years 1994 to 2000.
Some observers won't call Atlantic City's casino gambling experiment a success or a failure. It's more complicated than that, they say.
"This is a dramatically different place, far, far for the better," said James Kennedy, who heads the Casino Reinvestment Development Authority. "Is it as far along as people expected it would be after 25 years? No. But it's come a long way."
More improvements are in the works:
The new projects, combined with the continuing success of the casinos themselves, lead many people to downplay the problems unsolved by -- or triggered by -- casino gambling.
"It's been great for the city, great for the area, great for the state," said state Sen. Richard Codey, D-Essex. "It's a far different place now, but the successes definitely outweigh the failures. You have 45,000 people employed directly in the casinos. That's phenomenal. If I could do that in my district, they'd knight me."
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