Borgata Wins Over Atlantic City

The Borgata boom is only now being felt. From 1978, when gambling was introduced in Atlantic City, until 2003, a total of $8 billion has been invested in the market. Over the next four years alone, at least $2 billion in investment is expected. A new wave of construction is already under way, with Harrah's Entertainment (HET Quote) and Showboat adding hotel towers over the last two years.

"The nature of the casino industry is that you have to stay new and fresh and cutting edge in order to retain and gain the interest of the customer," said Bradford Smith, principal of International Gaming Consultant Services. "The Borgata was the shining new kid on the block, and the other casinos have to keep up with their neighbor. Now there's more pressure, and you're seeing the building start."

Indeed, in September, the Tropicana Casino and Resort will open The Quarter, a $245 million expansion that will add 502 rooms and 200,000 square feet of entertainment, dining and retail space. The Quarter was originally scheduled to open in March, but the date was pushed back after a parking garage collapsed at the end of October, killing four workers and injuring 20.

Caesars Entertainment (CZR Quote) is converting the Million Dollar Pier into The Pier at Caesars, an entertainment, dining and retail destination scheduled to open next year. The casino operator also plans to build another hotel tower and could further expand in Atlantic City, where it owns parcels of land in and around the boardwalk.

Even off the boardwalk, the momentum is building. Another wing of The Walk, a $76 million retail outlet shopping center in midtown, will open this spring, adding more stores to the 70 that opened last summer; these will include upscale brands such as Tommy Hilfiger and Guess? And New Jersey Governor James McGreevey wants to provide $60 million in aid for the Casino Reinvestment Development Authority to fuel hotel construction.

"There is a lot of building done down here. There's a big move towards retail, dining and entertainment venues," said Kassekert. "We have so much more to offer. We have the ocean, people can come in and stay overnight. Atlantic City is becoming more of an overall destination location, which is what it was in the past, even before gambling."