The expansion has caused a shakeup in the Northeast region. New projects presently planned have many people wondering how many casinos the area can possibly support. As it is, states that adopted casino gambling early on, such as Delaware, New Jersey and West Virginia, are seeing revenues siphoned off. Casino Boom Pinches Northeastern States (WSJ) (Click on the Associated Press image above for the WSJ article) Influx of Competition Leaves Early Players—Such as Delaware, New Jersey and West Virginia—Struggling to Keep Bets Flowing.

ATLANTIC CITY

A DECADE into the century, New Jersey got a new governor who vowed to cure what ailed this place. The story has a familiar ring today, but that governor was Woodrow Wilson, and the year was 1910.

A long line of public figures have tried to “fix” Atlantic City, including reformers who have attacked the corruption that was baked deeply into local politics, but most of them, including Wilson, had little lasting impact. Their experience is a cautionary tale for the latest in that line, Gov. Chris Christie, who announced plans last month to revive this city’s flagging economy by having the state essentially take over municipal operations in the casino district.

For generations, politicians tried to combat vice; for the last four decades, they have promoted it. Either way, Atlantic City’s fortunes have risen and fallen mostly on two factors: how easy it made access to gambling, liquor and sex — or some combination of the three — and how hard they were to get elsewhere.

The city’s heyday came during Prohibition, when alcohol, gambling parlors and brothels flourished openly, protected by a powerful political boss, Nucky Johnson.

“There was a social compact between people who understood the law had to be violated or ignored for the city to succeed,” said Nelson C. Johnson, the author of a history, “Boardwalk Empire,” that inspired a coming HBO miniseries of the same name. “The government, the resort industry and the rackets were closely tied, and they had a joint vision for the town.”

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Atlantic City’s population peaked at more than 66,000 in 1930, slipped below 60,000 in 1960, and by 1980 plunged to about 40,000, where it remains. The introduction of casino gambling in 1978 sparked a revival of the economy, but the city has been pummeled since 2006 by the explosion of legalized gambling nearby, in Pennsylvania, Delaware, New York and Maryland.

Now, residents, politicians, business owners and financial analysts are asking whether Atlantic City is at another turning point — or at death’s door. Can it hold on to the resort market share it has, or even regain some of what it has lost? Can it recover by adopting a new identity and a new appeal? Or is it fated to endure another long, steady slide?

Gambling profits at the city’s 11 casinos are down almost 30 percent since 2006 (nearly double the rate of decline in Las Vegas); the casinos have shed 12,000 jobs in recent years.

The signs of trouble were obvious on a midsummer visit, during what should be the peak season. The famed Boardwalk was not crowded, there was no wait for tables at popular restaurants, tickets were still available days before a Black Eyed Peas concert, and rows of slot machines sat unused, blinking away at no one. Prime real estate parcels lie vacant on the Boardwalk, where projects like the Pinnacle casino never came to pass and construction stopped recently on the Revel, which was supposed to become the city’s largest casino hotel but is now looking for a new owner.

It is a far cry from the city that first blossomed in the 19th century as a cheap beach getaway with easy railroad access from Philadelphia.

Atlantic City became a place for visitors to cut loose in a gaudy, carnival atmosphere where prostitution and illegal gambling flourished. Serving alcohol on Sunday, in open violation of state law, was a pillar of the economy. In 1908, Gov. John Franklin Fort called the city a “Saturnalia of vice.”

A few years later, Wilson’s administration managed to send Louis Kuehnle, the boss of Atlantic City, to prison, but that barely made a dent. Instead, it cleared the way for Enoch L. Johnson to take over and become the most powerful ruler the city has had. Johnson, known as Nucky, became close to the mobster Lucky Luciano, and in 1929 he welcomed to Atlantic City the first national meeting of organized crime leaders, including Al Capone.

The political machine, nominally Republican, ran the town with corruption so thorough as to make other cities’ political bosses blush. Every bid was rigged, every contractor paid kickbacks, every public employee had to pay the machine, and the police, prosecutors and judges were in on it.

Routine vote fraud produced turnouts big enough to make little Atlantic City a force in statewide politics. Reform movements out of Trenton stopped at the bridge to Absecon Island.

“It was corrupt, but people didn’t care, because it worked,” said Mr. Johnson, the historian, who is also an Atlantic County judge and no relation to Nucky. “The system took care of people’s needs, and the money came from out-of-towners.”

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But even at the city’s peak, poverty was pervasive, particularly on Atlantic City’s mostly black north side. An economy dependent on summer crowds offered mostly seasonal jobs, leaving workers struggling the rest of the year.

After years spent digging into Atlantic City, the Federal Bureau of Investigation shut down brothels in the late 1930s and finally nailed Nucky Johnson, who went to prison in 1941 for tax evasion.

By then, the city was already in decline — the end of Prohibition had taken away its advantage, and the Depression had left fewer people with money to burn. During World War II, the military insisted that the illegal gambling rooms be shut down so that servicemen stationed in the city would not be fleeced. The proliferation of cars after the war gave people access to many more resort locales.

But if the crowds faded, corruption did not. The political machine that exercised lock-step control of the city remained long after Nucky Johnson, even as there were fewer spoils to divide.

City leaders attracted the Democratic National Convention in 1964 — a precursor to the current calls to reinvent the casino district as a convention magnet — but that backfired. Reporters from around the country portrayed a city in decay, and delegates complained about an infrastructure so frayed that it could not meet basic demands like phone service and air-conditioning.

A 1972 shootout in an Atlantic City nightclub between rival Philadelphia drug gangs killed four people, wounded many more and cemented the city’s image as a dangerous place. The perception of crime, as much as the reality of it, remains a major problem.

But the 1970s also brought the one movement to cure Atlantic City that had a notable effect: the campaign to legalize casinos, approved by New Jersey voters in 1976. The first casino, Resorts International, opened two years later, to success beyond any predictions. The casinos gave the city a year-round economy for the first time, a building boom brought construction jobs, and gambling taxes became a reliable revenue source for the city, the county and the state.

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“Everyone understood that it was the one thing that could bring the city back,” said Mayor Lorenzo T. Langford, who has worked as a dealer and pit boss in casinos.

But the expected population rebound never materialized, and the vast majority of casino workers live outside the city. Twenty-six percent of Atlantic City residents lived in poverty in 2008, double the national rate. The city’s north side is riddled with empty lots where dilapidated houses have been torn down; there are ample vacancies in pricier parts of town, too, where developers and real estate speculators mistimed the market.

One critical decision that has been second-guessed was allowing casinos — including the newest and most profitable, the Borgata — in the marina district, which drew patrons and revenue away from the historic tourist core along the Boardwalk.

The old political machine was replaced by a kind of freelance corruption, with constant jockeying for advantage among rival factions, frequent turnover, and no one really in charge. In the last 40 years, there have been criminal convictions of five mayors and countless other officials.

(Mayor Langford has his own peculiar situation. His allies helped arrange for an $850,000 settlement in 2002 to a lawsuit he and a City Council colleague had filed against the city before he became mayor. The courts ruled that the settlement was poisoned by conflicts of interest and ordered the money returned, leaving Mr. Langford among the debtors to his own impoverished city, making piecemeal payments.)

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Meanwhile, as gambling continues to expand in neighboring states — Pennsylvania and Delaware both recently added table games to their slot-machine parlors — Atlantic City casino operators and local and state officials have not reached a consensus on how to change the city’s appeal.

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“What’s fascinating to me is this town’s always been able to sell itself, to sell something beyond its true worth,” Nelson Johnson said. “I’ve seen it all my life, and maybe we’ll see it again.”