Business English: Sandy reveals Atlantic City's deeper woes

It labels itself as "always turned on", but recently in Atlantic City, the famed US gambling resort, the lights went out. In the face of Hurricane Sandy, water breached the city's dunes and splintered its boardwalk, pouring past the casinos and turning the streets into rivers. The rare closure of the casinos and the city's evacuation offered a stark reminder that behind the glitz of gambling and dining, Atlantic City is suffering.

As the storm subsided, stragglers wandered along vacant streets and a boardwalk that was absent the usual mix of psychics, sweet and tattoo shops. "It's like the twilight zone," says Steve Welsh, a 35-year resident of Atlantic City who ignored Governor Chris Christie's orders to evacuate. "It's really freaky here without the hustle and bustle."

The city's 12 casinos are expected to reopen soon, allowing gamblers and tourists to return. However, by some measures the resort was suffering a slowdown long before Sandy hit.

  Hurricane Sandy forced Atlantic City’s casinos to close and reminded America that the resort is facing stiff competition

The rise of casinos and slot machine houses in New York, Pennsylvania and Maryland has been siphoning gambling revenue away from Atlantic City for several years. From 2006 to 2011, the resort's gambling revenues fell more than 36 per cent, according to the Center for Gaming Research at the University of Nevada, Las Vegas.

In response, Atlantic City has tried to rebrand itself as a sexy, upmarket beach destination rather than the kitsch casino town it had become. Although it has had some successes, such as the 2003 opening of the Borgata casino, they have not been sufficient to turn round the city's luck.

"It's incumbent on Atlantic City to give people enough reason to drive past local casinos and come for other forms of entertainment," says Joe Weinert, senior vice-president of Spectrum Gaming, an industry research group.

Atlantic City was the pre-eminent US tourist destination in the early 20th century. Intended as a retreat for rich Philadelphians, it grew famous for defying prohibition and drawing visitors with its carnival atmosphere of parades, pageantry, sand and supper clubs. The appeal faded as air travel put more distant destinations within reach. That prompted the city to reinvent itself in the 1980s as a gambling mecca, centred around casino palaces developed by moguls such as Donald Trump.

"Like any well-meaning addict who tries and fails to get clean over and over again, Atlantic City wants to be a better and different kind of city, but the forces aligned against it are just too great," Jonathan Van Meter wrote in The Last Good Time, a history of the city.

Weak leadership is often to blame, and some of those forces were evident as miscommunications marred the local government's response to the storm. Mr Christie publicly rebuked Lorenzo Langford, Atlantic City's mayor, after he opened a shelter in the city when the governor had ordered a full evacuation.

Tension between the city and state started to surface in 2010, when Mr Christie criticised Atlantic City's leadership, took greater control over of the casino industry and granted additional tourism funding. Mr Christie, a Republican, called the resort a "dying city" and Mr Langford, a Democrat, compared the governor's move to apartheid.

Meanwhile, an important state-supported project was expected to help revive Atlantic City's fortunes, but it has so far been unsuccessful. The USD2.4bn Revel casino opened in May with much fanfare, promising to be a Las Vegas-style casino that would draw wealthy weekend travellers from New York and beyond. Although the building and restaurants have received critical acclaim, Revel's revenues have fallen short of expectations each month, raising fears that it could default on its loans.

For Atlantic City, the latest storm came while the outlook was already cloudy. Analysts at Deutsche Bank project that the lost gambling days could help drag monthly revenues down 20 per cent from a year ago. "While a hurricane isn't an ideal situation for anybody, this is especially bad for Atlantic City, which has been struggling with the negative impact from competition and additional supply in the northeast," says Andrew Zarnett, gaming analyst at Deutsche Bank.

In spite of these problems, Atlantic City continues to rebrand itself with new slogans, restaurants and shows in the hope of broadening its appeal beyond card players and slot machine enthusiasts. "My mantra is that Atlantic City needs new product," says Jim Whelan, a state senator who was the city's mayor for more than a decade. "There's no compelling reason for a moderate gambler, who has been coming here since 1978 once a month to play slots, to come to the shore when there's somewhere else closer."