Now, with the resort struggling to find a new identity and new sources of revenue, the city is once again wooing gay tourists with vigor.
Growing up gay, Guardian said the sight of a rainbow flag was a welcome sign that one's business was welcome and that it was a safe place to go if the person felt threatened by a situation.
Guardian said he hopes the thousands of gay, lesbian, bisexual and transgender visitors who come to Atlantic City will come away impressed this summer, and consider the resort as a place to buy a second home.
Events aimed at the gay community include Sand Blast, a 3-day beach party weekend in July targeted to the gay community; the StandOUT Expo, a networking event in September for the LGBT community, and the Miss'd America Pageant, a drag spoof of the famous pageant, also in September. Sand Blast will include a female beach volleyball tournament called "Lez Volley," an underwear party, and a "Drag Race" and purse-tossing competition.
The mayor also dedicated a gay-friendly beach in Atlantic City at Park Place near Bally's, but says the entire city is gay-friendly.
The resort is trying to broaden its appeal beyond a gambling mecca by emphasizing restaurants, shops, nightclubs, spas and other attractions.
The Atlantic City Alliance, which markets the resort, recently commissioned a study of the gay travel market in New York, Pennsylvania, Delaware and Maryland.
It found that the primary reason gays visit Atlantic City is because it is easy to get to and has entertainment options. Only 21 percent named gambling as a primary reason to visit.
About 15 percent said they planned to spend $500 or more on gambling, with two thirds placing a $200 limit on their bets.
The survey also found that Atlantic City is not viewed as being especially gay-friendly, with only a quarter of respondents finding the destination somewhat or very LGBT-friendly. Among the eight Mid-Atlantic tourism destinations tested, Atlantic City scored lowest for a perception of being LGBT-friendly.
Brad Hurtado, executive producer of Sand Blast, said events like his are needed to make gays feel more at home in Atlantic City.
"Gay tourism and gay events transform communities, and they bring repeat visitors each year," he said.