In a new report titled, "Las Vegas-Atlantic City Peer Comparison: Why Las Vegas Holds the Stronger Hand," Moody's Investors Service cites a larger, more diverse economy and healthier demographics as key reasons why Las Vegas comes out on top.

This July 11, 2014 photo shows many of the Atlantic City N.J. Boardwalk casinos. (AP Photo/Wayne Parry)

"The difference between Atlantic City and Las Vegas in terms of their credit rating is eight notches. It's a big difference," said Julie Beglin, Moody's vice president and manager of local government ratings.

Moody's rates Las Vegas's at Aa2 versus Atlantic City's non-investment grade of Ba1. In 2010, Las Vegas' credit rating was Aa1, only three rating notches higher than Atlantic City's A1 rating.

"There are several reasons for Atlantic City's rating. One measure for instance is the unemployment rate. Atlantic City currently has a higher unemployment rate than even Detroit," Beglin said.

While the gaming industry in Las Vegas is growing again, Atlantic City's gaming revenues continue to drop. Competition from new casinos in neighboring states is the explanation for that, Beglin said.

"Another difference is the poverty rate. In Las Vegas, about 13 percent of individuals live below the poverty line and in Atlantic City it's almost 30 percent," Beglin said.

Las Vegas casinos make a lot of money from hotel rooms, entertainment and retail shops and that's why gaming revenue only generated 34 percent of Las Vegas' 2012 casino revenues. In the same year, 78 percent of Atlantic City's casino revenue came from gambling.

The future does not look particularly bright for Atlantic City, according to Moody's.

"We're at the point where it's a trend and not a blip," Beglin said. "We have a negative outlook on the rating meaning we see continued negative pressure over the next 12 to 24 months."