Faced with competition, resort town embarks on biggest building boom in 24 years. But will it work?

ATLANTIC CITY, N.J. – When people say you can’t miss the new casino in town, they’re not kidding. Rising like twin stacks of King Midas’ treasure, the $1 billion gold-plated Borgata lords over the marina, the city, and, it would seem, the fortunes of the Eastern seaboard. And it won’t even be finished for a year.

In a city lavished with architectural and financial excess, the brio of the project suggests a city staking claim as the East Coast’s gambling mecca.

Yet Atlantic City’s future is far from certain. Faced with growing competition from casinos on Indian lands and other gaming ventures, the city is undertaking the biggest building boom in 24 years in a quest to reinvent itself.

Concerned about its fusty image as the kingdom of the 25-cent slot UFABet player, Atlantic City’s magnates want to grab a younger and wealthier clientele in search of fine dining, music, lavish hotels, and shopping. In short: They want to transform the low-heeled Boardwalk into the stiletto-pump Las Vegas Strip.

Yet the move will test whether a city that has tied its economy almost exclusively to gambling can thrive in an era when slot machines and lotteries are becoming ubiquitous nationwide.

“Atlantic City needs to be careful,” says James Whelan, the recently departed mayor here. “We have been through these … new-wave promises.”

The building boom is certainly a formidable one. Besides the ornate Borgata, the state of New Jersey has approved $800 million in casino projects – 12,000 new hotel rooms, restaurants, and several gaudy retail and outlet shopping centers. This includes a renovated Monopoly-themed mall called Park Place.

Developers are building because competition is building. Casinos have been proposed for the nearby Catskills in New York State. More could be built in Pennsylvania. And the promise of tax dollars in a hopeless economy is fueling gambling initiatives in several states – including Tennessee, Nebraska, Arizona, and Idaho. At least two dozen other states are debating proposals from slot machines to lotteries in the next year.

Anti-betting partisans worry that every state will believe, like many people do in New Jersey, that gambling will rescue their state from fiscal collapse. “Atlantic City is a disastrous model,” says Thomas Grey of the National Coalition Against Legalized Gambling. “Everyone who goes to Atlantic City sees billion-dollar palaces. Atlantic City has not benefited.”

Yet casino owners here believed they had to do something. The town’s 12 casinos had already lost a chunk of business in the 1990s, when a native American tribe began spinning roulette at Foxwoods Resort Casino in Connecticut. Delaware answered with slot machines.

For the owners, the answer is to go more upscale. “I think Atlantic City is starving for something new and fresh,” says Timothy Wilmott, president of the Casino Association of New Jersey. “It’s a $4.3 billion gaming market. If Atlantic City can grow to be a $5 billion gaming market, it will be a success.”

The key, they say, is getting more gamblers to stay longer. “One of the basic problems we have in Atlantic City is that it’s room shy – you can’t get a room in the summer,” says John Burke, treasurer of Trump Hotels and Casino Resorts. “That’s why the Borgata is so important.”

Gambling has definitely left its mark on this city since the slot machines first began spinning oranges and cherries in 1978. After years of neglect and political floundering, the residential end of Atlantic City has blossomed in particular in the past 10 years.

In the 1980s, the state rewrote its laws to make sure part of the casinos’ annual tax revenue – now $343 million – would be channeled into a Casino Reinvestment Development Authority. With that money, the agency has razed old brick row houses and replaced them with 1,850 bright, suburban-style, houses and duplexes. More are under construction.

There’s a new park, high school, convention center, bus depot, and expressway. Plans are under way for a $3.5 million performing-arts center.

Scott Heath is one the locals who has benefited from the changes. Like many Atlantic City natives, Mr. Heath once passed crumbling Boardwalk piers to reach his job busing tables. Now the casino worker looks at the construction cranes piercing the sky and sees only opportunity. “I don’t see a downside,” he says. “I see a job.”

A drive through Atlantic City’s neighborhoods, though, reveals a town that could land heads or tails. A few blocks from the garish Showboat, ancient row houses list toward deserted streets. Restaurants are shuttered, and skinny boys bicycle past fields flowering with trash. Pawnshops and fried-chicken outlets surround City Hall, and there are few places to get a haircut, dry-clean a shirt, or shop for groceries.

Nearly one-quarter of the residents live below the poverty line, and unemployment, persistently in the double digits during the ’90s, slid to 9.3 percent in June. Gambling, says commerce professor John Warren Kindt of the University of Illinois, is not fueling the economy, just shifting money from somewhere else, as in a giant shell game. Nationally, consumers blew more than $55 billion on gambling last year, he says, money that wasn’t spent on items like cars or refrigerators, generators of far greater wealth.

“You’d be hard-pressed to tell me that gambling is economic development,” Mr. Kindt says. “It cannibalizes restaurants and everything else.”

Many of the destitute residents show up at the pink art deco Atlantic City Rescue Mission for meals of spaghetti and late-night prayer sessions.

William Southrey, the burly mission president, says about 20 percent of his clientele have gambling-related problems. But Southrey is no Sarah Brown, the mission babe bent on shutting the craps game in “Guys and Dolls.” The casino owners, Southrey says, are “benevolent,” donating food to his mission and good causes throughout the city.

Still, the man worries. The Borgata might not save the city, when new casinos are poised to rise in the New York Catskills. Maybe everything that dies won’t come back.

“I think the state and the community should be looking at other industries,” he says. “We have a false sense of security, and it could all go away like that.”