For most part I agree with what you said but you might note that most casinos are tilting towards non gaming revenue.
As difficult as it might be to believe for many years with the few casions that Atlantic City had, the gaming revenue was higher than that of all of Las Vegas.
Where the money seemed to be and where even at that time Las Vegas made the big bucks was in non gaming revenue.
I think the ratio was something like about 6 to one compared to A/C
A/C is now heading that way. It is renting out their show rooms to promoters, closing many of the casino owned restaurants and bringing in branded chain restaurants to cut costs
With many of the casinos now going union, the cost of operation has increased but the problem imho lies in the fact that roulette wheels still have the same amount of numbers, dice still have 12 spots and the odds can not be changed to increase casino profits there.
Sure there is money to be made from convention space, selling trinkets and the like but who is getting hurt most is the player as give aways,comps, parties,and cash coupons are slowly disappearing.

As a frequent visitor to Atlantic City I see the impact of many things including smoking and I'm thinking that perhaps what was meant in that article was that nearby slot parlors in the Philadelphia and New York areas that allow smoking are taking away some of the business.
It's easy to blame the smoking ban and while that might have a bit of an impact then one must ask why some casinos are much more profitable than others.

Yes, people do want to go to the newest, biggest,and fanciest and properties do have to continually upgrade and re invent themselves.
The problem is, it's sort of like putting a new heart in a 90 yr. old man, You still have that 90 yr. old man to look at from the outside.

Many of the casinos in Atlantic City are losing their focus, are forgetting about their players and only looking to cut costs. The Trump properties which now are pretty much controlled by financial institutions can only see the bottom line and will continue to save money until they are bankrupt.
Rather than looking to fix the problem by trying to lure new players and keep their current ones, they seem more interested in assignig blame to gas prices, competiton, smoking bans and the economy. If in fact that were the case, then ALL the casinos would be hurting. Not so as Harrah's and the Borgata continue to bring in the best entertainment and try marketing in ways that doesn't include smoke and mirrors