|By Donald Wittkowski, The Press of
Atlantic City, Pleasantville, N.J.McClatchy-Tribune Regional News
Dec. 08, 2011--Atlantic City gaming revenue will continue to fall through 2015, eventually bottoming out at $2.8 billion annually, a new research report grimly predicts of the nation's second-largest casino market.
The PricewaterhouseCoopers LLC study estimates U.S. gaming revenue will grow 5 percent overall from $57.5 billion in 2010 to $73.3 billion in 2015, aided by an economic recovery and continued expansion in the regional casino markets.
However, Atlantic City's casino industry will be the only market to have lower revenue in 2015 than 2010, PwC says. Atlantic City is already mired in a five-year revenue slump caused by the sluggish economy and competition from casinos in surrounding states, particularly archrival Pennsylvania.
"(Of) all the segments of the U.S. casino gaming industry, the Atlantic City market is at the greatest risk from the combined impacts of economic uncertainty and intensifying competitive pressures from regional casinos," the report states. "These worries are being borne out by our projections, with Atlantic City set to be the only segment of the U.S. market whose revenues will be lower in 2015 than 2010."
Tony Rodio, a top Atlantic City gaming executive, disputed the predictions, calling them "a dim view." He said the report overlooks two key positive developments starting next year -- the grand opening of the $2.4 billion Revel casino, and a new $30 million-per-year marketing fund to promote the city. The marketing fund will be overseen by the Atlantic City Alliance, a public-private partnership between government and the casino industry.
"I think with the opening of Revel and the Atlantic City Alliance, you're going to start to see Atlantic City rebound," said Rodio, president and chief executive officer of Tropicana Casino and Resort.
The explosive growth of casino gambling across the country made its way to New York City in October, creating even more potential competition for Atlantic City.
At this point, the new $830 million Resorts World Casino at the Aqueduct racetrack in Queens is limited to video slot machines and electronic table games. Rodio said it appears the Resorts World Casino has had no impact so far on Tropicana's slots business, but he warned about live table games eventually coming to New York. Political debate has already begun about possibly legalizing live table games in New York.
"If and when New York gets table games, that certainly will hurt," Rodio said of Atlantic City.
Atlantic City gaming revenue has already dropped more than 30 percent from its high of $5.2 billion in 2006, the year casino gambling began in Pennsylvania. Revenue came in at $3.6 billion in 2010 and will fall about 7 percent this year to $3.3 billion, the PwC report predicts.
Although the rate of decline will slow in coming years, Atlantic City revenue will continue to shrink through 2015, when it settles at $2.8 billion, the report states. If the projections hold up, that means Atlantic City's revenue in 2015 will be only about half of the 2006 peak.
"The underlying reason is that Atlantic City attracts most of its patrons from Pennsylvania, New York, Delaware and Maryland -- and the opening of racetrack casinos and regional casinos in those markets has cut into Atlantic City's business," the report states.
PwC characterizes Atlantic City as "an appealing destination resort" that will continue to attract overnight visitors. But even the prospects of an improving national economy will not be enough to fully offset the crush of regional competition on the Atlantic City market, the report adds.
Among other key findings in the report:
Regional casinos represent the fastest-growing U.S. segment, triggered by new gaming on the East Coast; the introduction and expansion of table games in Pennsylvania, Delaware and West Virginia; and electronic table games in New York.
Nevada's gaming market, which peaked in 2007 at $13 billion, only to decline in 2008 and 2009, is in the midst of a comeback. Nevada revenue will continue to grow through 2015, when it is projected to reach $12.95 billion, just under its historic high.
Indian-owned casinos have returned to stable growth in 2011, up nearly 4 percent to an estimated $27.5 billion in gaming revenue. Forecasts call for the tribal casinos to continue their growth through 2015. At that time, they are expected to generate $33.4 billion in gaming revenue.
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