Will Philly's gamble on expanding its casino vision pay off?
There was a time when Nevada was the only state in the nation that permitted casino gambling.
That all changed on May 26, 1978, in the resort town of Atlantic City, N. J., when a venue known, appropriately enough, as Resorts Hotel and Casino, located at 1133 Boardwalk, opened for business.
Resorts wasn’t the lone casino in Atlantic City for long. Once New Jersey’s state legislature voted to allow casino gambling in the city, with the intention of restoring prosperity to the struggling town, other casinos followed. This led to the creation of thousands of new jobs.
There were stretch limos and shimmering skylines, glitter and glitz.
Through it all, the impact on the rest of Atlantic City was virtually undetectable. As a recent article published in The Atlantic lamented, all these years later, Atlantic City “still has desperate trouble sustaining even a single grocery store.”
As most everyone knows, long gone are the days when casino gambling was available exclusively in Nevada and New Jersey. The impact of the heightened competition on casinos in New Jersey has been devastating. These days, competition for the casino industry in Atlantic City can be found in nearby states, among them Connecticut, Maryland and, of course, Pennsylvania.
Since the beginning of 2014, four Atlantic City casinos — including the dazzling Revel — have gone out of business, and at least one more is in danger of joining them in the near future.
The city itself, whose benefits from the presence of the casinos appear to have been minimal, now faces soaring unemployment — lost jobs that directly or indirectly revolved around the now-defunct casinos — to go with the many other issues confronting the battered town. Shore towns across southern New Jersey have felt the impact as well.
“When casino gambling arrived in Atlantic City, property values skyrocketed,” says Bill Ordine, a Baltimore-based journalist and Philadelphia native who specializes in gaming issues. “However, the entire process was rooted in speculation. People could only attempt to calculate what casino gambling would mean economically to the South Jersey shore, and the immediate impulse was that the impact would be positive.
“For a period of time, it was,” adds Ordine. “Yet as time went on, it obviously didn’t remain positive.”
Meanwhile, as the casino industry in Atlantic City continues its struggles, plans are under way to open Philadelphia’s second casino, to go along with the SugarHouse Casino in Fishtown. Live! Hotel and Casino is a joint venture of Greenwood Racing, Inc., and Cordish Companies. Live! is billed as a world-class hotel casino and entertainment complex costing an estimated $425 million. The venue will be located at 900 Packer Ave. in South Philadelphia’s Stadium District.
According to Joe Weinberg, a Cordish Companies partner, “It will be the only place in the country where a casino and every major league sport are represented in one district.”
Besides SugarHouse, Philly has a trio of casinos just outside the city limits (Parx in Bensalem; Harrah’s in Chester; and Valley Forge in King of Prussia).
Is the market in danger of becoming saturated? How will the city be impacted? What will happen to property values?
“The short answer to each of these questions is, it depends,” says Ordine. “For example, there have been occasions when a casino has elevated property values in a positive way, but casinos don’t usually go up in residential areas, so the impact tends to be minimal. In the case of Live!, it will be located near a residential area in South Philly, but that area already is impacted by baseball, football, basketball, hockey and concerts, so I’m not sure how much difference the casino will make.”
Ironically, advocates for two of the six finalists for the casino license that ultimately went to Live! planned to utilize venues in and around Center City — at Broad and Callowhill streets and at Eighth and Market streets – and they touted the benefits to the neighborhood in their presentations.
“They pointed out the casinos would generate a significant amount of car and foot traffic at the proposed locations, and they believed that would have a positive effect,” says Jerome Kranzel, senior vice president of CBRE Group, Inc. “At this point, we’ll never know. Fortunately, both properties are owned by active developers, and I’m certain both are actively exploring ways to utilize those sites in an atmosphere where the development climate continues to be extremely strong.”
While casinos offer immediate contributions to the region’s tax base, Jamie Weiner, president of Delphi Property Group, is skeptical of any casino’s ability to generate economic benefits for the community in which it is located.
“First of all, Philadelphia is not likely to be a casino destination,” he says. “That isn’t why people will come to Philadelphia, so people who live in and around the area where the casino is located are the primary customer base. Beyond that, casinos aren’t designed to lure customers who can be expected to patronize other businesses.
“They’re all-encompassing. Once you’re in the casino, they want you to gamble there, eat there and shop there. How does that benefit nearby restaurants, shops and other attractions?”
Weinberg counters that Live! will create more than 3,000 construction jobs and 1,300 permanent jobs while producing in excess of $100 million per year in new tax revenue for the city and state.
“In Philadelphia, we have spent a significant amount of time meeting with local neighborhood organizations and leaders and their representatives to better understand the needs of the community,” he says, “and we are committed to supporting the city and local neighborhoods with our time, money and energy.”
Ordine notes that SugarHouse sponsors the Mummers Parade and contrasts that with Atlantic City, “where casinos were designed more or less like fortresses.”
“There are things a casino can do to impact a community in a positive way,” Ordine adds. “The bigger question is, is the presence of casinos a good thing or a bad thing? Really, it depends on your perspective.
“The impact on property values is negligible. Increased traffic could help local businesses, but increased traffic also means increased crime — such as car theft, pickpockets, robbery, not the kinds of serious crimes that can destroy a community, but the kinds of crimes generated by a shopping mall.”
In other words, when pondering the impact of a casino on a neighborhood, it’s difficult to speak in terms of absolutes. However, Weinberg is absolutely convinced of the merits of Live!
“With the legalization of casinos in neighboring states throughout the Mid-Atlantic and northeastern portions of the country, the facilities that will thrive are those like ours that are located within the major population bases and offer the highest-quality gaming, dining, entertainment and hospitality experiences.”
Matt Schuman is an area writer. This article originally appeared in the special section of "Real Estate."