The Future of the Casino Economy - Just One More Hand: Life in the Casino Economy (2015)

Just One More Hand: Life in the Casino Economy (2015)

Chapter 8

The Future of the Casino Economy

Gamblers know that it is important not to stay at the tables too long. Your best chances of winning are when you start playing the game. But it is hard to walk away. You keep thinking, “Just one more hand.” Atlantic City and the State of New Jersey also keep betting on casino gaming, and they, too, are trying to hang on for one more hand. Early on, the wager on casinos seemed to pay off. The tourists came back to the city built on sand. Jobs were plentiful and the wages and benefits were decent. The surrounding neighborhoods and small businesses did not always benefit from the boom, but the bust has been even tougher. Casino profits are down and some are losing money. Tax revenues are declining. Employees are feeling squeezed. Nevertheless, policy makers and business leaders keep hoping that the next hand they play will be a winner. A new destination resort—Revel—was supposed to be their ace in the hole. The State of New Jersey used its own chips—tax credits—to sweeten the pot. Not a winner. A tourism district was carved out of the city and taken over by the state to be run by a private-public partnership instead of local government. It has proven slow to pay out and, when it does, the major beneficiaries are likely to be financial speculators investing in real estate ventures instead of members of the local community. The newest bets are on Internet gaming and sports betting. As suggested by a February 10, 2013, headline in the Press of Atlantic City: “Web Wagers Seen as A.C.’s Savior, Ruin,” not everyone sees these gambits as winners either.[1]

Meanwhile, employees are also trying to keep in the game as long as possible. When we began this project in 2006, Atlantic City casinos employed over 40,000 people and the economy was still strong. We wanted to know if casino jobs were good jobs. Thirty-five interviews and eight years later, approximately one-fifth of those jobs are gone. More will disappear soon. Showboat, Zoe’s employer, is closing at the end of the summer of 2014, putting most of their 2,100 employees out of work. Even though the property still has gross operating profits, Caesars Entertainment (the company that helped close Atlantic Club) determined that it was in its business interest to shut the property down. Presumably, as the owner of three other properties in the city, Caesars believes that they can absorb most of Showboat’s customers themselves rather than lose market share to competitors. Rumors abound about whether the property will have a second life as an entertainment venue with little to no gambling. Revel also announced that it will close at the end of the summer of 2014, though a new buyer could reopen the property. And the struggling Trump Plaza is also scheduled to close, with little hope of reopening.

Those frontline jobs that remain are not providing new employees the same opportunities as the Day-Oners who opened the casinos in the 1970s and 1980s. Employees in a wide variety of jobs loved the early days in the casino industry. Work was fun. Management knew you and valued you. Opportunities were available for workers right out of high school. Employees found they could build their lives and provide for themselves and their families. Yes, there was smoking (even to this day, on parts of the casino floors) and drinking and rude behavior. Working swing shift or grave shift made it hard to coordinate schedules with friends and family. Each job posed specific health challenges due to standing, repetitive motions, carrying heavy objects, or second-hand smoke. Female employees working as cocktail servers and entertainment dealers were expected to use their bodies as marketing ploys. The negatives were always there. But they were offset by the monetary rewards as well as the sense that staff and management were collectively bringing amusement to the lives of their customers.

These days, the bonds among employers, workers, and customers have frayed. With new owners coming and going through mergers and bankruptcies, greater responsiveness to debt-holders and other financial investors focused on short-term gains, and managers who move from casino to casino in a global labor market, employees feel they are treated like numbers on an accounting spreadsheet. One employee working at Atlantic Club when it was for sale opined that the reason management was closing most of the restaurants was to make the property look more “desirable” for prospective buyers, by simply lowering costs on the corporate balance sheet.

Throughout the city, wages have been frozen, benefits cut, and in some casino houses the work has been reorganized to remove individual autonomy and skill. There are fewer opportunities to get to know the customers as cutbacks impinge on service. More and more employees are working part-time, income-packaging with multiple jobs. As Bernice, a former gaming inspector, shared: “Almost everybody at the casinos now are part-time workers. That’s sad. Because that was a reason why New Jersey thirty years ago wanted casinos here. They wanted them here so people can build up their family life. Now they got people that can’t even maintain their family life.” If casinos survive but the employees don’t thrive, the promise of sustainable economic development cannot be achieved.

This kind of economic insecurity is not unique to Atlantic City or to the casino industry. The industry is in a particularly difficult position because it now operates in a saturated market in many parts of the country. Each new gambling venue has to draw most of its convenience gamblers from a smaller geographic radius before bumping into the territory of the next closest town with a casino. Amid this backdrop, Atlantic City and some other localities have been trying to transition from convenience gambling centered on slots and maybe some table games to destination resorts for overnight guests. Success depends upon standing out in a crowd. It’s not easy to do. A good analogy would be sports teams. Most sports franchises primarily appeal to fans in their local media market. Very few teams are able to sustain a premier position of national popularity year after year. Las Vegas, in this analogy, is the New York Yankees of gambling destinations (despite some lean years in the wake of the Great Recession). Atlantic City, with its beaches, boardwalk, and new investments in other amenities, has a lot to offer tourists as well. But locations that have little besides casinos are unlikely to compete beyond convenience gambling. Most casino markets, just like most sports franchises, will have to settle for a smaller, local fan base. But this means policy makers and voters need to pause before betting the farm on casinos to bring in fresh revenue.

Yet the betting on a gambling comeback continues in Atlantic City (and elsewhere). Aided by less regulation with the state takeover, casino moguls and political leaders are taking actions to enter the market for Internet gambling, potentially a multi-billion-dollar industry.[2] Competition among U.S. states for a share of online gaming is fierce. Delaware was the first state to do so in June of 2012. In February of 2013, Nevada and New Jersey both rushed to legalize online gambling originating from their states. New Jersey governor Chris Christie signed a bill authorizing e-gambling for a ten-year trial period. The initiative was constructed to augment the revenue of the brick-and-mortar casinos while bringing in tax revenue for the state. Currently, Internet wagering on blackjack, slots, and poker can only be offered by New Jersey casinos, though most have partnered with other companies with expertise in online gambling (who must be approved by the Division of Gaming Enforcement). The computer servers must be physically in Atlantic City. Bettors must be physically present anywhere in the state and have to register to verify that they are also at least twenty-one years old.[3]

Proponents echoed their mantra from the original 1978 referendum: jobs, tax revenue, and investment. Rosy scenarios prior to going live predicted anywhere from hundreds to thousands of new jobs, mostly for information technology specialists.[4] These IT jobs may be good jobs—at least at first. And some laid-off slot technicians may have the skill set to take advantage of the opportunities provided.[5] New Jersey Internet gross gambling revenue (GGR) is taxed at 15 percent, more than the 8 percent for onsite revenue; mandated CRDA investment rates are higher as well. Eventually, leaders envision legalized e-gambling might be able to cross state lines, allowing New Jersey to once again garner income from outsiders.

Critics contend that when customers gamble from home rather than venturing into casinos, it further decimates non-gaming revenue. What about the frontline service workers (described in chapter 5) in food and beverage service and hotel operations? How are businesses in the tourism district (chapter 7) supposed to take advantage of Internet gambling? Even if the casino houses themselves will profit from e-gambling, the impact on jobs, and therefore the local economy, is questionable. Since New Jersey casinos are owned by large corporations, holding companies, or private equity firms, there is no reason to believe that any added profits will be reinvested locally in Atlantic City—or even New Jersey. Further, as often happens with technological innovation, the new jobs may require very different skills than many of the lost jobs, making smooth transitions between labor markets difficult. Tending to a computer server is not the same as interacting with customers. Sliding down a slippery slope, one can imagine virtually empty casinos alongside warehouses full of computer servers tended by a small group of electronics specialists. If e-gambling is the next Schumpeterian innovation, it may eventually crowd out the older industry and many of the existing casinos with them. While the whales and other high rollers would continue to visit a few select resorts that combine gambling with lavish restaurants, clubs, shows, shops, and other attractions, the middle and low end of the market could be hollowed out.

So far, the critics’ pessimism is warranted. Tax revenue has been far lower than expected. Consequently, the investment bank Morgan Stanley has already lowered its projections about the profitability of Internet gambling.[6]And the industry itself is battling over a bill introduced in the U.S. Congress to outlaw e-gambling completely, with members of the American Gaming Association falling on both sides of the debate.

New Jersey has also sought entry into sports betting, but this venture is in legal limbo. Federal law—the 1992 Professional and Amateur Sports Protection Act (PASPA)—only permits states with a history of sports betting to continue the practice: Nevada, Delaware, Montana, and Oregon.[7] New Jersey also had the opportunity to be “grandfathered in,” with a special loophole, designed explicitly with Atlantic City in mind, giving states with a ten-year history of casino gambling up to a year to jump in and authorize sports wagering. Meeting the 1993 deadline would have required an amendment to the state constitution, but the effort was stalled in the State Assembly. Exactly why is unclear.[8]

As other gaming revenue declined, interest was revived. Advocates maintain that sports betting on events such as the National Collegiate Athletic Association’s (NCAA’s) “March Madness” basketball tournament would bring tourists to the city during the cooler months.[9] So the legislature passed an authorizing amendment to the state constitution in 2010, and it was ratified by New Jersey voters in 2011. The legislature followed up by amending the Casino Control Act to permit sports betting, thus directly challenging PASPA. New Jersey’s law was taken to court by the four major professional sports leagues and the NCAA. In 2014, the U.S. Supreme Court refused to hear the case, leaving the provisions of PASPA in place.

Undeterred, some political leaders continue to look for ways around the ban, pointing to states that ignore federal laws against marijuana use.[10] As a stopgap measure, New Jersey’s Division of Gaming Enforcement published temporary regulations allowing fantasy sports tournaments, effective April 22, 2013. Fantasy sports are technically not considered gambling, and any income from fantasy sports wagers would not be subject to the state gambling (luxury) tax but rather the ordinary corporate income tax.[11]

Sports betting, if allowed to stand by the courts, probably cannot single-handedly turn around the prognosis for any one locale. Even if New Jersey succeeds in exploiting a loophole in PASPA, other states will follow quickly, so any advantage would be short-lived.

Just as a gambler looks to one hand, one pull on the slot handle, one spin of the wheel, or one toss of the dice to change his or her luck, the temptation for industry analysts and policy makers is to latch onto a quick fix to turn around the local economy. But we all know that we would probably be better off with diversified investments in our retirement portfolio rather than taking our savings to a casino. The same is true for economic development. A diversified strategy that includes but does not fully rely upon gambling—or even the broader leisure and hospitality sector—makes more sense than quick fixes. Economist Oliver Cooke, editor of the South Jersey Economic Review, has studied the economic performance of thirteen similarly sized U.S. metropolitan areas between 1990 and 2012. Nine of them diversified their economies during this period, becoming less reliant on a few key industries; these diversifying local economies demonstrated much better growth in employment and personal income than Atlantic City—which was the least diversified at both the start and the end of the period in question.[12] His findings support previous economic research indicating that cities with diversified economies provide space for “knowledge spillovers” between industries and thereby encourage growth.[13]

Another important characteristic of diversified economies is that they can rely upon internal markets, meaning that local businesses provide goods and services to local residents. This dynamic is reminiscent of the virtuous circle in the high road approach to economic development identified by David Gordon (see chapter 3). Professional and business services, currently underrepresented in Atlantic City compared with faster-growing metropolitan areas, include several industries that could potentially expand in the local market. Personal services, particularly those designed to assist people working nonsocial hours, would also make promising investments. Imagine if CRDA designated casino resources toward projects to provide affordable child care and elder care 24/7 for shift workers. Employees would not have to pass their children back and forth between caregivers.

Exports are also critical. Tourism, as an industry, is technically an “export,” drawing external money to the local economy. So can labor-intensive light manufacturing, done on a small scale.[14] Southern New Jersey, for example, has a strong history of yacht manufacturing; the industry struggled during the economic downturn but could rebound. In another article, Cooke suggests that targeting economic development funds toward small business start-ups is an effective way to pursue diversification: “Incubating new businesses (especially ones that lie outside the hospitality and gaming sector) will prove vitally important to Atlantic City’s economic future.”[15]

From its early history, Atlantic City has prospered when it has used the comparative advantage of its beachfront location to promote tourism. These days, however, its location provides a potential new edge in renewable energy. The Atlantic Ocean’s off-shore wind—and its waves and tides—can be harnessed to provide electricity, according to environmental advocates. Wind power, for example, is one of six areas recommended for job-creating “green economy investments” by the University of Massachusetts’s Political Economy Research Institute (PERI). Researchers there identify a range of jobs stimulated by the wind power industry, from electrical engineers to metal workers to electronics assembly.[16] Power generation can generate backward linkages to manufacturing turbines. Former casino workers would need retraining to take advantage of such opportunities, thus programs should be developed to assist with this process. Unlike many casino jobs, the occupations listed by PERI are primarily gendered male. On the one hand, such job opportunities would alleviate the concerns expressed by former poker dealer Lena that there are few opportunities in Atlantic City for young men like her son. On the other, training women for these occupations would give them the chance to break down barriers.

In 2010, New Jersey passed the Off-Shore Wind Economic Development Act. The organization Environment New Jersey contends, however, that there has been little follow-through by the administration of Governor Christie in implementing the wind power initiative.[17] One proposal to build a wind farm three miles off the Atlantic City coast failed to get approval of the New Jersey Board of Public Utilities in early 2014—to the dismay of wind power advocates.[18] The state Court of Appeals has ordered the board to reconsider the project (with a new pricing structure). Southern New Jersey has the chance to lead in the next “wave” of economic innovation and benefit from the spillover effects of new technologies by nurturing green energy industries, in addition to focusing on leisure and hospitality.

Once gamblers can play blackjack, slots, and poker legally from home, the normalization of gambling that Atlantic City helped initiate will be entrenched. With legal e-gambling on the horizon, every home will potentially be a casino—which seems to us a perfect metaphor for the current state of our economic lives. As we said in the opening of the book, risk is becoming a way of life. Those at the top of the income distribution knowingly make big bets but have the resources to recover from losses. Hence, in the years since the Great Recession of 2008-2009, economic recovery has been much faster for the wealthy one-percenters on Wall Street than for small businesses and working families on Main Street. Increasingly strapped working families are assuming risks without intending to gamble. Many families who bought homes that have plunged in value, many students who took out loans in the belief that they were investing in their future, many retirees (including those in the public sector) who were promised pensions, and many employees who have given years of their lives to their employers and their customers are realizing that what once seemed like prudent choices have turned out to be gambles.

While economist Joseph Schumpeter and today’s libertarians glorify risk as the engine of innovation, too much risk undermines the fabric of our social and economic lives. Risk means lives characterized by insecurity and instability. The erosion of job quality that our participants described in their casino jobs are echoed throughout the global economy. The expansion of part-time, temporary, and contract labor that started incrementally several decades ago has surged during the so-called recovery from the Great Recession. Companies that once hired full-time workers with benefits now utilize more contingent labor. This means that people who lost full-time jobs during the recession sometimes find themselves working for their old employers once more, but now without any long-term job security or benefits. The ability to build a life, one of the crucial elements of a good job and one of the functions a successful economy needs to fulfill, is slipping away for too many people, generating fear, anxiety, and anger. Economist Guy Standing terms this process precariatization.[19] And not just because of all the cost cutting that diminishes the ability of employees to sustain themselves and their families. Precariatization also destabilizes a secure, work-based identity, our sense of ourselves.

An economy is not simply a machine that produces goods and services. We live there. Living in the casino economy—one that is an endless stream of short-term financial transactions—is undermining the well-being of workers, their families, and their communities. But a sustainable economy needs to be about more than short-term gains. As political economists, we agree with Nobel Prize winner Amartya Sen, who argues that human flourishing should actually be the metric for economic success. Flourishing (or well-being), according to Sen, is dependent upon both meeting basic needs and having meaningful choices about how to live.[20] Our research on casinos, along with this view of the economy, has informed our definition of a good job as one that helps you create a life and reinforces a positive sense of identity. Isiah, who worked his way from kitchen runner to dealer to supervisor and back to part-time dealer, reflected on what makes a job a good job: “Respect. Most people would say money but if you’re being respected I think that’s what makes the most important part.”

Good jobs, therefore, provide access to resources that enable people to achieve well-being as they define it. But well-being is also dependent upon whether the experience of work enhances one’s dignity and sense of purpose or undermines these human needs. For example, a major research project by Gallup on the conditions that contribute to well-being identifies “career well-being” or, more broadly, “purpose” (to include unpaid activities) as one of five critical dimensions. Positive relationships with managers and engaged collaboration with coworkers, Gallup finds, are the most important determinants of career well-being.[21] Gallup’s research is insightful, but we should not conclude that well-being at work is simply a function of winning the “boss lottery.” As we have seen, the larger institutional structures of the contemporary economy make it difficult for individuals to be good bosses. Better public policies and institutions can help promote well-being at work.[22] Good jobs, therefore, need to be a central goal of our economic and development policies in order to meet peoples’ needs for sustainable livelihoods and meaningful work.

In chapter 1, we quoted a part-time floorperson, Graciela, who compared casinos to other entertainment venues: “The truth of the exchange is less clear.” She was thinking about customers who gamble in the expectation of getting comps from the casino. When they feel they are not being treated fairly, they lash out—usually at an employee who does not have discretion over ratings and rewards. Graciela’s phrase resonates with us. The truth of the exchange seems to have disappeared from many of the implicit social contracts that are necessary for a healthy economy. This trend has important implications for the casino economy and its workers. The truth of the exchange between employer and employee or between management and worker is less clear as casinos and other businesses themselves become products exchanged on global markets by hedge funds, private equity managers, and other financial interests. This financialized economy is not conducive to long-term time horizons. Instead, it is all about the next hand.


The article is by Donald Wittkowski and Hoa Nguyen.


Michael Cooper, “Casino Boom has States Looking to the Internet for Gambling Dollars,” New York Times, August 3, 2012, and Wayne Parry, “Wall St. Cuts Its Outlook for Internet Gambling,” Press of Atlantic City, March 25, 2014.


Jennifer Bogdan, “Internet Gambling: It’s Here to Stay,” Press of Atlantic City, November 17, 2013.


Donald Wittkowski, “Analysts See 100s of Jobs in E-Betting,” Press of Atlantic City, October 13, 2013.


We spoke with one frequent gambler and software entrepreneur who is developing and marketing a program to track the betting habits of online poker players. Such small businesses do benefit from the spillover of e-gambling, but the employment potential of such cottage industries is limited.


Parry, “Wall St. Cuts Its Outlook for Internet Gambling,” and Angela Della Santi, “Internet Gambling Revenue a Bust for State Budget,” Press of Atlantic City, April 2, 2014.


The latter three have offered sports lotteries. In Delaware, for example, customers can buy tickets at lottery outlets to wager on the outcomes of professional football games. Oregon eliminated their sports lottery in 2005, and Montana focuses on fantasy sports.


Christopher L. Soriano, “The Efforts to Legalize Sports Betting in New Jersey—A History,” New Jersey Lawyer no. 281 (April 2013): 22-25.


Steven Lemongello and Jennifer Bogdan, “Officials: A.C. Would Thrive on Madness,” Press of Atlantic City, March 20, 2014.


Brent Johnson, “U.S. Supreme Court Allows Sports Betting Ban in NJ to Remain,” New Jersey Star Ledger, June 24, 2014, and Reuben Kramer, “Court Upholds Sports Bet Ban,” Press of Atlantic City, June 24, 2014.


Hoa Nguyen, “A.C. Casinos to Make Sports Bettors’ Fantasy a Reality,” Press of Atlantic City, March 19, 2013.


Oliver Cooke, “The Diversification Premium,” South Jersey Economic Review (Winter 2014): 3-7, accessed May 29, 2014,


Edward L. Glaeser, Hedi D. Kallal, José A. Scheinkman, and Andrei Shleifer, “Growth in Cities,” Journal of Political Economy 100, no. 6 (1992): 1126-52.


Cooke, “The Diversification Premium.”


Oliver Cooke, “Economic Update,” LIGHT’S ON, 2, no. 1 (2012): 8-9, accessed May 29, 2014,


Robert Pollin and Jeannette Wicks-Lim, Job Opportunities for the Green Economy, June 2008, accessed June 10, 2014,


See Environment New Jersey, “Report Highlights Environmental Benefits of Wind, but New Jersey Off-Shore Wind Program Stuck in Neutral,” News Release, December 5, 2013, accessed June 11, 2014, and Michael Miller, “N.J.’s Economic Pearl Seen in Ocean’s Power,” Press of Atlantic City, June 6, 2014.


Wallace McKelvey, “State Rejects Wind Farm Plan,” Press of Atlantic City, March 20, 2014.


Guy Standing, The Precariat: The New Dangerous Class (London: Bloomsbury, 2011), 16.


Amartya Sen, Development as Freedom (New York: Anchor, 1999).


Tom Rath and Jim Harter, Wellbeing: The Five Essential Elements (New York: Gallup, 2010). For additional information about the Gallup project, see the Gallup-Healthways Solutions website, accessed June 26, 2014,


For a starting point on how to create such an institutional context, see the International Labour Organization’s preconditions for decent work. International Labour Organization, “Decent Work Agenda,” accessed June 26, 2014,