Hotel Online 
News for the Hospitality Executive



 
Atlantic City Casinos Won Less Money then Prior Year for the First Time in the 29-year History
 of Legalized Gambling; Decline Attributed to New Pennsylvania and New York Competition and
 Smoking Restrictions on Atlantic City Casino Floors
By Suzette Parmley, The Philadelphia InquirerMcClatchy-Tribune Regional News

Jan. 11, 2008 --Last year, for the first time in the 29-year history of legalized gambling in Atlantic City, the casinos won less money than they did the year before, figures released yesterday show.

The 5.7 percent decline to $4.9 billion was hardly a surprise. For month after month in 2007, the gaming halls reported wins that were down from 2006 levels -- all attributed to new competition from slots parlors in Pennsylvania and New York, and new smoking restrictions on Atlantic City casino floors.

Still, the first year-to-year decline provided a marker that the gambling mecca did not want. It also deprived the people of New Jersey of about $24 million in gambling tax revenue, which the state uses to benefit senior citizens and people with disabilities.

"It is a shock -- a slap on the side of the head for anyone who owns a casino in town," said Carlos Tolosa, president of the Eastern Division of Harrah's Entertainment Inc., which owns the Harrah's Marina, Showboat, Caesars and Bally's casinos in Atlantic City. Collectively, the four casinos made up 44 percent of last year's total revenue.

"This was a wake-up call for everybody that we have to continue to build nongaming attractions and convert this resort town into a destination," Tolosa said, "and that we have a long way to go."

Only three casinos had revenue increases -- Caesars, at 5.1 percent; Harrah's Marina, 2.1, and the Borgata Hotel Casino & Spa, 1.6 percent -- for the year, according to data from the New Jersey Casino Control Commission. The other eight casinos reported decreases ranging from 1.5 percent at Resorts to 12.1 percent at Tropicana.

Developer Donald Trump complained bitterly about the smoking ban before it took effect April 15 and predicted it would hurt Atlantic City and his three casinos there. "I told you so," he said yesterday. Pennsylvania's casinos allow smoking throughout.

"The impact of the competition from neighboring jurisdictions was obvious," said Trump, who owns the Trump Taj Mahal, Trump Marina and Trump Plaza, "but I think the smoking ban has had as large of an impact.

"I spoke to analysts about this, and most of them said it wouldn't have an impact," Trump said. "Well, they were wrong. It's a very competitive landscape, and this put us at a disadvantage."

Monthly revenue for Atlantic City's casinos declined from a year earlier in each of the nine months from April to December.

Slots revenues fell the most, down 8.9 percent to $3.46 billion, while revenue from table games edged up 3 percent to $1.46 billion, underscoring the growing importance to Atlantic City's future of dealer-manned table games, which are not permitted in Pennsylvania.

"There is no question that I've been seeing less people," said Paul Westle of Elkins Park, a craps player who frequents the Atlantic City Hilton, which saw its annual revenue fall 7.6 percent. "The reality is that there are two parts to the week, weekends and weekdays. Both times are drawing less players, and the result is that the revenues are off."

The 71-year-old retiree said he planned a trip to Atlantic City again this weekend, but added: "I can't make the numbers look good all by myself."

Six Pennsylvania slots parlors began opening in November 2006 -- including Philadelphia Park and Harrah's Chester Casino & Racetrack in the Pennsylvania suburbs.

Revenues for the six Pennsylvania slots parlors totaled $1.04 billion in 2007, of which state taxes take 55 percent, according to the Pennsylvania Gaming Control Board.

The most recent addition was the state's first stand-alone casino, the $412 million Mount Airy Resort Casino in the Poconos, which debuted in mid-October.

There are 12,686 active slot machines at the six slots facilities, and more are on the way.

Penn National Gaming Inc., of Wyomissing, Pa., plans to open its 2,000-slot Hollywood Casino at Penn National Racetrack next month in Grantville, just outside Harrisburg. That densely populated area is home to many slots aficionados who traditionally travel by bus to Atlantic City.

"The success in Pennsylvania, thus far, is the result of the legislature and governor, who realized it could stop the loss of gaming revenues flowing to other states such as New Jersey," Gaming Control Board spokesman Doug Harbach said yesterday.

To help Atlantic City thrive, billions of dollars in capital investment are pouring in.

At least four billion-dollar-plus casinos are planned, three along the Boardwalk and a $5 billion mega-casino with 3,000 hotel rooms in the Marina District.

New hotel towers will open this year at the Taj Mahal, the Borgata and Harrah's Marina, adding 2,553 hotel rooms to the market.

Tolosa at Harrah's Entertainment said losing Pennsylvania as a major feeder market for slots business meant Atlantic City had to expand its reach.

"We have to work very hard to bring in incremental customers and reach out to other markets, like New York, D.C. and Baltimore," he said. After years of relying on Pennsylvania, "we have to look at other sources of revenue. No question about it."

Contact staff writer Suzette Parmley at 215-854-2594 or sparmley@phillynews.com.

-----

To see more of The Philadelphia Inquirer, or to subscribe to the newspaper, go to http://www.philly.com.

Copyright (c) 2008, The Philadelphia Inquirer

Distributed by McClatchy-Tribune Information Services. For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA. NYSE:BYD, NASDAQ-NMS:PENN, NYSE:HET,




To search Hotel Online data base of News and Trends Go to Hotel.OnlineSearch
Home | Welcome| Hospitality News | Classifieds| One-on-One |
Viewpoint Forum | Industry Resources | Press Releases
Please contact Hotel.Onlinewith your comments and suggestions.