The Agenda

Are We Doing It Wrong?

By Roger Gros, Publisher

On Election Day 1976, the people of Atlantic City poured out into the streets to celebrate the legalization of casino gaming, which was supposed to revive the fortunes of this declining resort town. The message had been that there would be a job for everyone, more tourists and tax money to spruce up the frayed edges of the Boardwalk. It was the first time gaming had been legalized outside of Nevada, and it was the first time casino gaming was supposed to revive a fading resort economy.

Well, now we know that this effort was a dismal failure. Yes, millions of people visited Atlantic City, but they were largely contained to the big-box casinos that lined the Boardwalk and later populated the Marina district. Owners of the small businesses that were expected to benefit from these tourists were bitterly disappointed. The hotels that backed the referendum were sold by their owners to large casino companies that cared little about the historic nature of the buildings or the community.

Outside of increased real estate taxes, the city received no compensation for hosting these casinos, providing security for visitors or the negative impacts of gaming on the community. Today, even the real estate taxes have recently been mitigated. Casinos in Atlantic City now pay a PILOT fee (payments in lieu of taxes), which is good for the casinos but bad for the city.

Several other jurisdictions have tried to use casinos to revive their tourism industries, with varying levels of success. But the one consistent element throughout all these efforts is that the locals don’t really benefit from the introduction of casinos, with the possible exception of the landowners who sell out to the large and largely uncaring casino companies.

I recently visited Hot Springs, Arkansas, a former resort powerhouse that combined the natural wonders of the area (the natural hot springs) with the “sin” industries of gambling, alcohol and sex to attract tourists. The visit was inspired by one of the best books I’ve read in the past year, The Vapors: A Southern Family, the New York Mob, and the Rise and Fall of Hot Springs, America’s Forgotten Capital of Vice, by Dan Hill. It’s a fascinating tale of the quasilegal gambling industry in the city and the opportunity it had but squandered to outshine the young gambling mecca of Las Vegas during the 1940s.

Eventually, however, Arkansas legalized gambling, and now hosts three active casinos with another one planned. Two racetracks were automatically granted casinos, Southland in West Memphis and Oaklawn in Hot Springs.

So what has gambling done for Hot Springs? Not much, if my quick visit is any indication. While Oaklawn is a historic racetrack with a nice casino, it’s just like the big boxes you used to see in Atlantic City. The one difference is that the original track owners are still in place, so they’ve figured out how to profit without selling out.

But tacked onto the end of the racetrack, along with acres of surface parking, players can enter a modern casino with all the top games and tables, without sniffing the historic part of the city. A small hotel and a few decent restaurants keep them inside. I was there on a weeknight, so I can’t really judge how much business they do. There weren’t that many customers—possibly because the horses weren’t running that night. But then again, I’ve never been to a racino where horse racing actually drove casino players.

There are some wonderful old buildings in Hot Springs, but most of them are vacant despite their unique architecture. The venerable Arlington Hotel, what used the be the center of the city’s culture, is still open, but it’s fraying around the edges. It reminds me of the old glorious hotels in Atlantic City that fell to the wrecking ball to make way for the glass-box casinos.

With the growth of distributed gaming today, what if we had taken a similar model and allowed small to medium-sized businesses to get a piece of the action? Maybe a large gaming company could operate the smaller casinos for a big piece of the revenue, and have enough left over to renovate these historic buildings.

Increased tourism is still a big reason why jurisdictions legalize gaming. So why not integrate it within the community and highlight the things that make the jurisdiction attractive to begin with? In Hot Springs, there was a series of casinos along Central Avenue in the downtown part of the city in the ’40s and ’50s across from the bathhouses that housed the springs. By reproducing that era with modern conveniences and regulatory protections, the city would be booming again, instead of crumbling. It’s worth a shot.