Hotel Online 
News for the Hospitality Executive




 
With Pennsylvannia's Increasing Casino Presence, Odds Are Against Atlantic City:
Revenues at New Jersey Casinos are Plummeting

By Matt Assad and John L. Micek, The Morning Call, Allentown, Pa.McClatchy-Tribune Regional News

Jan. 8, 2010--For the past three decades, if Lehigh Valley residents wanted to legally toss dice or play Texas Hold'em, they've had to endure a two-hour, 120-mile drive that includes several toll booths and traffic on the Atlantic City Expressway.

Come this summer, that will no longer be necessary, as six casinos within 70 miles of the Lehigh Valley race to add roughly 500 table games they hope will keep local residents from carrying their money to the shore.

With Gov. Ed Rendell's signing of a long-awaited table games bill Thursday, blackjack, roulette and poker are expected to hit Pennsylvania's nine casinos as early as June.

"Why would anyone continue to drive to Atlantic City?" said Robert LaFleur, a Wall Street gaming analyst with Susquehanna Financial Group. "This is just another nail in the coffin for the Atlantic City market."

Since Pennsylvania leaped into the gaming market more than three years ago, revenues at the 11 casinos in Atlantic City have plunged, including a 13.5 percent decline reported in December.

While it may be too early to begin writing an Atlantic City eulogy, the gambling mecca's odds of staying alive got a lot longer Thursday. The table games bill had been the subject of so much politicking that Rendell signed it behind closed doors, explaining later that he didn't think it deserved celebration.

"It is laden with WAMs and pork," Rendell said, referring to "walking around money" for lawmakers' pet projects that would be funded through a "local share" provision in the new law.

Table games are expected to raise about $370 million over the next two years. This year, the games will be taxed at a rate of 16 percent, with 14 percent going into Pennsylvania's sagging general fund and 2 percent split among host counties and municipalities. After two years, that split drops to 12 percent and 2 percent.

Though casinos, including the Sands Casino Resort Bethlehem, could begin offering table games by June, they might not be running them until September.

The local share of the tax money from table games will be used in some cases to fatten county and municipal budgets. In other cases, it will be used to fund specific projects, such as a guarantee of $2.4 million a year for 20 years to help pay down the bond debt on construction of a Monroe County campus for Northampton Community College.

But a lot must happen by summer, and to get there casino operators are already racing to bring table games closer to home.

Sands officials said details of their plan won't be final for weeks, but in November, Sands President Robert DeSalvio said if tables were approved, Sands would add 80 to 100 tables and as many as 600 jobs.

Mohegan Sun, near Wilkes-Barre, plans to add 60 tables, a poker room and as many as 500 workers, while casinos outside Philadelphia -- Parx and Harrah's -- have projected adding about 200 tables and 1,000 employees combined.

"We'll be dealing cards and rolling dice by this summer," said Mohegan Sun Casino Chief Executive Officer Robert Soper. "There's no reason we can't capture all those dollars that have been going to Atlantic City."

Though slot machines bring in far more revenue than table games, tables are coveted by casinos because they tend to tap into a different market of younger, wealthier gamblers who are willing to drive farther, stay longer and spend money at ancillary businesses such as restaurants, hotels and shops.

That theory is perhaps most evident at Mount Airy Casino Resort. Though its revenues have been disappointing, it is the only casino in Pennsylvania with a hotel, and it's hoping to use table games to take advantage of that, casino President George Toth said.

Mount Airy plans to add 54 table games on the main floor, four third-floor high-rollers tables and 15 poker tables overlooking the gaming floor.

Toth said he plans to add as many as 350 full-time workers and, in the longer term, projects spending $40 million to add 200 rooms to its 188-room hotel.

That is the effect Toth believes tables can have on Mount Airy -- and New Jersey.

"Our primary market will shift from Pennsylvania to New York and northern New Jersey -- the people now going to Atlantic City," Toth said. "We intend to own the New York and northern New Jersey markets."

matthew.assad@mcall.com

610-820-6691

-----

To see more of The Morning Call, or to subscribe to the newspaper, go to http://www.mcall.com.

Copyright (c) 2010, The Morning Call, Allentown, Pa.

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.




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.