Boardwalk Empire: The Birth, High Times, and Corruption of Atlantic City

by Nelson Johnson

  The size of Trump’s financial obligations were exceeded only by the Taj Mahal itself. At the time of its construction, it was the biggest and most expensive building ever erected in New Jersey. Trump’s Taj bears no resemblance to the elegant mausoleum of an Indian Princess for whom the original one is named. Its eclectic architecture incorporates bits and pieces of several extravagant buildings, including the Regency Pavilion in England’s Brighton Beach, the Alhambra Palace in Spain, and Moscow’s candy-cane striped St. Basil’s Cathedral. There’s also some early Miami Beach thrown in together with touches of Las Vegas. Captain John Young would have loved it.

  From a distance, Trump’s Taj looks like a gigantic, thickly frosted, multilayered wedding cake, custom-baked for someone with more money than taste. What Trump calls “quality,” others might consider gaudy. Regardless, the numbers on this behemoth of a building are staggering. While only a visit to the property can give one a sense of the place, a recitation of some of the parts that make up the building is helpful in appreciating the commitment Donald Trump has made to Atlantic City. It’s a marriage that won’t end anytime soon.

  Trump’s Taj Mahal stands nearly 500 feet tall, making it one of the highest buildings in New Jersey. It covers 17 Boardwalk acres and includes 1,250 guest rooms (400 luxury suites), 175,000 square feet of meeting and exhibit space, an 80,000-square-foot arena, a 1,500-seat theatre, a 30,000-square-foot ballroom, and a 6,000-space parking garage. There are a dozen places to eat and when all the restaurant and banquet facilities operate at capacity, 13,000 people can be served at a time. Construction of the Taj consumed enough steel girders to make nearly five full-scale replicas of the Eiffel Tower. There are acres and acres of marble used lavishly throughout the hotel’s lobby, guest rooms, casino hallways, and public areas—the quantity consumed nearly two years’ output for Italy’s famed Carrara quarries. Austrian-made chandeliers hang over the gaming tables, escalators, and throughout public spaces of the building—the total chandelier bill came to $15 million. Another $4 million was spent on uniforms for the staff of more than 6,500 employees. At the time of the grand opening, mercifully scaled back since, everyone was outfitted in outlandish costumes, a mixture of Arabian Nights fantasy and traditional Indian garments.

  The core of Trump’s Taj—and from which all blessings flow—is a 120,000-plus-square-foot gambling casino, the world’s largest at the time of its opening. On the day this mirror-lined cavern opened, it increased Atlantic City’s gaming floor space by more than 20 percent. The casino contains more than 3,000 slot machines and nearly 200 gaming tables. To accelerate the pace at which money is fed to the house, there are 1,300 compact change machines scattered over the casino floor along with dozens of ATM machines. The roaring and ringing of the slot machines, and shouting and groaning from the blackjack and craps tables, are endless.

  Visually, the casino is dazzling. The lighting is the type you get when you decorate a room in crimson, violet, purple, orchid, fuchsia, salmon, and scarlet—the type of light that makes everyone’s hair look as if it’s been dyed. Toss in big-breasted cocktail waitresses, statues of elephants decked out in jewels, and men on stilts with turbins, and the effect is dizzying. As the New Baedeker said of Atlantic City nearly a century ago, so may be said of Trump’s Taj, “It is overwhelming in its crudeness—barbaric, hideous, and magnificent. There is something colossal about its vulgarity.”

  The only vulgar thing to Donald Trump about his Taj Mahal was the debt incurred in constructing it. Despite early receipts averaging in excess of $1 million per day, Trump still couldn’t handle both the construction debt (nearly $1 billion) and daily operating expenses. Within less than a year after opening the Taj, Trump made a prepackaged bankruptcy filing, which reorganized the debt with his banks and bondholders. However, the reorganization plan approved by the Bankruptcy Court clobbered many contractors who had worked on the job. To this day there are local contractors and suppliers who cringe at the mention of Donald Trump’s name. It wasn’t a proud day for the Donald, but he survived it and his Taj Mahal is a winner, earning slim but consistent profits. In the Taj and his other holdings, Donald Trump’s presence will be felt in Atlantic City for many years to come.

  Another person who helped transform Atlantic City was Arthur Goldberg of Park Place Entertainment, who died at age 58 in October 2000. Smart and tough, yet ethical and courteous, almost courtly, Goldberg was a leader in the true sense of the word. In the brief period he was active in the gaming industry he earned an enviable reputation with casino moguls and Wall Street investors alike. In August 1999, Barron’s, the Dow Jones business and financial weekly, declared him “King of Craps” in a feature article.

  Arthur Goldberg’s empire began with his family’s Newark-based trucking company, Transco Group, a hauler of goods for such national accounts as Tropicana, Safeway, and Pepsi-Cola. A graduate of Villanova Law School, he gave up the law after only two years to run the family business for his father, who had suffered a serious heart attack. In 1979, with earnings from Transco, Goldberg acquired a major position in Triangle Industries, a wire and cable maker. He quickly became CEO of Triangle and realized a $7 million profit on his investment when Triangle was bought by other investors a year later. In 1983, Goldberg made another large investment into International Controls, a conglomerate producing everything from bomb casings and electric utility towers to tractor-trailers. Again, Goldberg became CEO and several years later, after improving the value of the company, sold his stock for another large profit. His reputation as an investor willing to get his hands dirty by involving himself in the management of the companies he bought added to Goldberg’s aura.

  As the decade of the ’80s came to a close, Goldberg had been so successful that he found himself with little to do. In 1989, he acquired controlling position of a food distributor, DiGiorgio Corporation, which sold Italian food items. It was profitable, but not enough of a challenge. A year later he paid $14 million, or $8 a share, for a 5.6 percent interest in Bally Entertainment, Inc., the owner of Bally’s Park Place Casino Hotel. At the time, Bally’s was in serious trouble and was in danger of being forced into a Chapter 11 bankruptcy filing.

  Goldberg had bought into a headache. Consistent with past ventures, he dove into the casino business feet first, never contemplating failure. He went to Bally’s Board of Directors with a turnaround plan, conditioned on his being named Chairman and CEO. The Board accepted his proposal and Goldberg never looked back. His performance in turning Bally’s around was extraordinary by anyone’s yardstick. Investors who stayed with Goldberg from the day he joined the company in November 1990, to the Hilton Hotel’s purchase of Bally’s nearly six years later, saw their shares increase in value from $3.50 to $28. At Goldberg’s encouragement, despite the earlier debacle, Hilton reapplied for licensing and this time was successful.

  The Hilton merger moved Arthur Goldberg and the Hilton organization—and with them, Atlantic City as well—to the first tier of the gaming industry, worldwide. Goldberg became President of Hilton Gaming and brought 11 Hilton properties, including the Flamingo and Las Vegas Hilton, under his control with the four he had. That total increased to 18 gaming properties with the purchase of three major Mississippi casinos when newly formed Park Place Entertainment was spun off from Hilton. The final addition to his empire before his early demise was Paris-Las Vegas, a lavish $800 million casino hotel that opened in September 1999. Arthur Goldberg set the standard for the new gaming entrepreneur in Atlantic City and the nation. He is sorely missed.

  Several political leaders whose efforts in the public arena throughout the 1980s and ’90s complimented the dynamism of people like Goldberg, Trump, and Wynn are James Usry, William Gormley, and James Whelan. Despite differences in politics and styles, each, in their own way, worked to keep Atlantic City moving forward.

  James Usry was part of the last wave of Blacks drawn from the South to Atlantic City’s hotel industry. Born in Athens, Georgia, in 1922, Usry’s family came north
shortly after his birth. He was a soldier in World War II, serving in a famous segregated unit, the “Black Buffaloes.” An outstanding athlete, he played for a short time with the “Harlem Globetrotters.” A graduate of Atlantic City High School and Lincoln University, Jim Usry devoted most of his career to education. As a teacher and school administrator, he touched the lives of thousands of local children.

  Usry had been a community leader for years prior to making his first run for political office in 1982. He lost to Michael Matthews in a bitterly contested election. Following Matthews’ indictment, Usry was elected Atlantic City’s first African-American mayor in the recall election of 1984. Re-elected to a full term in 1986, Jim Usry’s agenda was Atlantic City’s residents. As stated by the Press of Atlantic City at the time of his death:His legacy is found in the daycare facilities, the youth centers, and the new housing complexes that dot the city—even though many of those improvements were built after he left office. He was the one who sent the message: Atlantic City’s residents cannot be passed by.

  Jim Usry’s tenure as mayor was scarred by bribery charges arising out of the “COMSERV” investigation in 1989. COMSERV was a seriously flawed state “sting operation,” long on press releases and short on hard evidence. Usry eventually pled guilty to a minor campaign finance violation and was defeated in his re-election bid in 1990 by James Whelan.

  Jim Whelan, a genuine Democrat (not an Atlantic City “Republicrat”), came to city politics by a different route. A native of Philadelphia, he vacationed in Atlantic City during the summer and as a teen became a lifeguard on resort beaches. After completing college at Temple University, where he was an All-American swimmer, Whelan relocated to Atlantic City and was hired as a teacher and swimming instructor in the local school system. Through his involvement with both students and parents, he built a strong network of supporters. In the ’80s he was elected twice to City Council, where he was often a lone voice of reason. During his several terms as mayor beginning in 1990, Jim Whelan displayed uncommon political courage in leading a city divided by race and petty factions. He is the first post-Farley era mayor to govern effectively. During Whelan’s three terms in office, whole portions of the city were transformed. His integrity and maturity place him in a class apart from political types. Atlantic City’s debt to Jim Whelan is a large one.

  The third player who has had a key role in beginning the rebuilding of Atlantic City over the past 20 years is State Senator William Gormley. Bill Gormley is steeped in city and county Republican politics. He is the son of the late Atlantic County Sheriff Gerald Gormley, a loyal lieutenant in the Republican organization under both Nucky Johnson and Hap Farley. Gormley is a graduate of Notre Dame and Villanova Law School. Despite the makings of an attorney, politics and government are his profession. As a legislator, con-ciously or not, he emulates Hap Farley. Regardless of his aspirations for higher office, he’s been successful at exploiting his relationships in the state capitol to Atlantic City’s benefit. In the 20 years he has been in Trenton, Bill Gormley has earned the respect of every key player in the State House. In the time he has served as Chairman of the Senate Judiciary Committee, he has grown into one of the most powerful public officials in New Jersey. He should continue to be a force in both Trenton and Atlantic City.

  Working together throughout the ’90s, Gormley and Whelan provided not only the leadership but the vision and political will to get things done. Whelan was the mayor Gormley needed as an ally and the city needed as a leader in order to begin rebuilding the resort. And the rebuilding has begun.

  The numbers speak for themselves—casino gambling is a success. The annual gross win by Atlantic City’s 12 casinos compares well with that of the more than 50 casinos in Las Vegas, with the Atlantic City take exceeding $4.3 billion annually. Since the coming of casinos, nearly 50,000 new jobs have been created in a county with a total workforce of just over 80,000 in 1977. The casinos have spurred nearly $7 billion in new construction, increasing the property tax base from $295 million in 1976 to nearly $8 billion in 2002. More than 11,000 new first-class hotel rooms have been constructed. The property taxes paid by the casinos to Atlantic City’s government now total approximately $165 million per year, representing nearly 80 percent of local tax revenues. Additionally, the casinos provide funding of approximately $340 million annually for seniors and, to date, more than $700 million has been paid into a fund for public improvement loans administered by the Casino Reinvestment Development Authority. Finally, more than 30 million people will visit Atlantic City this year. Not even Sanford Weiner would have dared to predict those kinds of numbers.

  What does the future hold? In one critical way, today mirrors the past. Atlantic City remains a town with a singular purpose for its existence—to provide leisure time activities for tourists. As ever, the economy is totally dependent on money spent by out-of-towners. Visitors must leave happy. If they don’t, they won’t return. And getting them to return frequently requires a lot of effort and imagination.

  The attractions available to lure leisure-time dollars generally, and gambling in particular, have increased dramatically during the past 25 years. From Native American Reservations (Foxwoods Resort Casino in Connecticut is now the largest casino in the world) to riverboat operations, casino gambling has swept across the country. When state-run lotteries are thrown into the mix, competition for the gambling dollar is everywhere. But, the public is fickle, and the history of gambling reveals an ebb and flow in its popularity. There’s good reason to believe that Atlantic City and Las Vegas will have the greatest staying power as gambling resorts. Nevertheless, if Atlantic City’s growth is to continue and the local economy remain vital, it must become more than a gambling resort.

  Atlantic City must transform itself into a destination for more than day-trippers by bus and car. And that is a large task. Surveys show that few people consider Atlantic City as a place to “vacation” but, rather, merely a place to gamble, have dinner, see a show, and return home. If they stay overnight, it’s usually a single evening. Major changes are needed to shatter that image. The new Convention Center is an important building block in broadening the resort’s economic base, but many more hotel rooms are needed to attract the large national conventions and trade shows. Equally important to the convention trade and new hotel rooms is air transportation.

  The resort will never be more than Philadelphia’s Playground, dependent on the northeast region, until it is able to support an airline providing regularly scheduled national air service. To date, the most striking failure of Atlantic City’s casino operators has been their inability to cooperate with one another in either attracting a major airline or sewing the seed money and financial guarantees for a start-up to provide service to the major metropolitan regions of the country. The casino operators seem more intent on competing with one another for day-trippers and bus patrons than joining together to expand their base nationally. It’s difficult to understand why, after 20-plus years of success, the major casino players have been unable to work together to establish air transportation service. If they continue to wait for a solution to come from government, the resort will never have dependable airline service and this town’s horizons will remain limited.

  Admittedly, the airline industry is no place for amateurs, especially since the events of September 11, 2001. The costs and perils are enormous, but they aren’t insurmountable. Their success on other issues demonstrates that if Atlantic City’s 12 casinos join together and make a concerted effort, the resort would, in short order, have an airline providing service nationwide. Whether by means of the formation of a financial consortium to underwrite an air carrier’s initial losses or pledges to purchase a given number of seats, filled or not, regularly scheduled air service is within the resort’s grasp. The only ingredient missing is the collective will of the gaming industry to make it happen.

  The political will needed to propel Atlantic City forward can only come by means of a consensus among casino executives,
political leaders, and the community, generally. But achieving a broad consensus to provide continuing direction and an enlightened plan for the future is difficult in this town because of its past.

  Atlantic City has yet to adjust fully to life without political corruption. Hap Farley’s defeat was more than the collapse of a political machine—it was the end of an era. Under Farley and his predecessors, the political ward system was Atlantic City’s dominant institution. For nearly a century, it was the prime means for distributing constituent services and political power and operated more by consensus than bossism. Ward politics was akin to a social compact, and its actions were respected by the entire community. It was the thread that united the city. The passing of the political ward system marked the end of effective government in Atlantic City. The Republican machine was corrupt, ruthless, and greedy, but it got the job done. At its worst, it extorted money from anyone who came into contact with city hall and obstructed needed reforms. At its best, the Kuehnle-Johnson-Farley regimes were responsive to individual needs of their constituents and, surprisingly, more often than not, provided able leadership on issues important to the city.