ATLANTIC CITY, N.J. (AP) _ Drawn by the bright and dazzling lights of casinos and the bleak squalor of the urban area beyond the Boardwalk, filmmakers and novelists are using Atlantic City as a popular setting for tales of organized crime, drugs, prostitution, gambling and murder.

''An ugly mixture of glitter and sleaze,'' is how novelist Ovid Demaris sees the city in his upcoming work, ''Ricochet.'' In ''Under the Boardwalk,'' author Bill Kent's characters are portrayed in a ''universe of dazzle and slime.''

TV viewers got glimpses of Atlantic City recently with a movie based on Elmore Leonard's 1985 novel, ''Glitz,'' starring Markie Post and Jimmy Smits. In his book, Leonard talks about the glittery casinos thriving on bus tours that ''dropped the suckers off for six hours to lose their paychecks.''

He also describes the city's Inlet neighborhood as an area that ''looked as though it had been fought over in a war, house to house, and half the people had packed up and left.''

All the attention gets mixed reviews from city fathers who take pride in the allure of their town but worry that it's being typecast.

''We do look like a perfect stage set,'' said John Fox, a spokesman for the Atlantic City Convention & Visitors Bureau. ''We have a beautiful stage set along the beachfront with the giant casinos ... but the rundown neighborhoods also seem to be an easy target.''

Mayor James Usry accuses some writers of ''yellow journalism''' when it concerns Atlantic City. ''But that's what sells papers and books,'' he said.

''I don't know of any Mafia in Atlantic City. You know, these authors could say it took place in Mayville, Ill., but what would that mean to people? Atlantic City is one of the most designated city names in the country.''

Louis Malle's critically acclaimed movie, ''Atlantic City,'' starring Burt Lancaster and Susan Sarandon, marked the start of Atlantic City's revival as a setting for moviedom and novels. That was nine years ago, barely a year after legalized gambling began.

Now barely a month passes without Atlantic City featured in some TV show, movie or book.

Diane Keaton has shot scenes in one casino for a story about three nightclub entertainers. The comedy-magic team of Penn & Teller was in the resort last spring to film ''Penn & Teller Get Killed.''

''Atlantic City Weekend: A Romantic Adventure,'' was released this fall. Characters in the book by Helen Mourtos include an entrepreneur ''on the outside of society,'' a casino dealer and a mysterious nightclub dancer.

Previews described the novel as ''offering insiders a view of life in the world of Atlantic City's casinos ... about the temptations beneath the casinos' bright lights.''

Fox doesn't think the visions of a sleazy Atlantic City have driven away business or visitors.

''I can't throw rocks at the movie writers and novelists because they happen to choose us as their setting,'' he said. ''I don't think anybody except a travel writer goes out of their way to write something positive about any particular city.''

Fox worries more about how trade publications portray the city.

''They prefer to look at the business side of things,'' he said. ''They are more important to us, the marketers.''

Demaris said it was the lure of gambling, the big hotels and Atlantic City's history as a resort that enticed him to choose it as the setting for ''Ricochet,'' a novel that promises to take ''readers straight to the heart of a world of greed, political corruption, organized crime and murder.''

Could his novel have worked in another city?

''No,'' said Demaris, ''because casino gambling is a part of it.

''I needed that atmosphere ... and I needed a kind of Mafia family like you have down there. In New York, the Mafia has gotten sort of small, it has kind of quieted down.''

Kent doesn't think that kind of allure is bad for Atlantic City.

''What makes Atlantic City interesting to writers is the incredible clash of extremes. You can actually see the fortunes of people going up and down,'' he said. ''The city is far more than multimillion-dollar casinos and run-down neighborhoods. It's complicated, politically, economically and mostly historically.''