Slots deal Atlantic City casinos a losing hand

January 10, 2008 6:29:10 PM PST
A punch in the mouth. A kick in the pants. A slap in the face.

Call it what you like, but 2007 was a painful wake-up call for Atlantic City, the gambling resort which for 28 previous years had known nothing but ever-increasing revenues.

Year-end figures released Thursday by the state Casino Control Commission document the first-ever decline since casino gambling began here in 1978, showing a 5.7 percent decrease from the previous year.

All told, the city's 11 gambling houses took in $4.92 billion, down from $5.21 billion in 2006. Only three casinos reported increases for the year.

Most of the damage was done by the opening of slots parlors in Pennsylvania and New York, which drew customers who were once Atlantic City's exclusive domain. A partial smoking ban didn't help, either.

Slots revenue fell 8.9 percent in 2007, even as table games revenue was up 3 percent.

"It was difficult, no doubt about it," said Mark Juliano, chief executive officer of Trump Entertainment Resorts, which operates three of the city's 11 casinos. "The real impact of '07 was plain and simple: It was Pennsylvania. It's also not going anywhere.

"The good news is it has reinforced with all the major players here the need to work really hard to transform Atlantic City to the next plateau, a place where people come and stay for two or three days instead of relying on day-tripping bus customers."

Three of those bus-riding customers were sunning themselves on an unseasonably warm day this week outside the Tropicana Casino and Resort. The three women from Long Island, N.Y., typify what gives Atlantic City casino operators indigestion but what also gives them hope.

The three friends like free buffet coupons, hotel rooms and show tickets - all costly expenses for the gambling houses when multiplied by thousands of players all seeking a freebie. They come for a few hours, then go back home. And they're fairly low-stakes gamblers.

Yet the reasons they come to Atlantic City are some of the very ones casino executives trumpet as things that make Atlantic City an appealing alternative to racetrack slots parlors in other states.

"We love the Boardwalk, the water, and the scenery," said Ann Cappielli, who comes here once a month and who was hoping to win back the $60 she had just lost on slots at the Tropicana.

"I love the restaurants and the shops, and just sitting on the Boardwalk and watching people from all walks of life go by," added her friend Madeline Franco. "You can't do that at Mohegan Sun. You're trapped inside the casino there."

Yet the Atlantic City that these three women know is changing.

The revenue decline has meant cutbacks on free rooms, show tickets, and even buffet coupons mailed to gamblers to get them to come here. And along with a wave of new hotel tower construction that will add more than 2,500 rooms to the market by Labor Day will come top-name - and high-priced - entertainment and dining venues.

In December, the casinos' revenue fell by 10.6 percent, led by another awful month at the Tropicana, whose owners lost their casino license that month after a year of poor performance.

The Tropicana was down 20.9 percent in December, and 12.1 percent for the year. About two dozen potential buyers have expressed interest in the Tropicana, which is expected to be sold by the end of April.

Caesars Atlantic City was the only casino that had what could be considered a good year in 2007, with its revenue up by 5.1 percent. Harrah's Atlantic City showed a 2.1 percent increase, and the Borgata Hotel Casino & Spa, which routinely dominates the market here, showed an increase of just 1.6 percent for the year. The Borgata, however, led all casinos with revenue of $750.9 million.

But the year-end news for the rest of the casinos was much worse: The Atlantic City Hilton Casino Resort saw its revenue fall 7.6 percent; Trump Plaza Hotel and Casino dipped 6.8 percent; Trump Marina Hotel Casino fell 5.9 percent; Bally's Atlantic City was down 5.3 percent; the Showboat Hotel Casino fell 5.1 percent; the Trump Taj Mahal Casino Resort was down 3.9 percent; and Resorts Atlantic City was down 1.5 percent.

Donald Trump said that while he was not surprised about the citywide decline given the increasingly competitive environment, he thinks Atlantic City will endure.

"Long term, Atlantic City is going to be just fine," Trump said. "It has something no one else has - the ocean."

Carlos Tolosa, eastern division president of Harrah's Entertainment, which runs four casinos here, said Atlantic City's casinos could start showing small revenue increases of 1 to 2 percent in February or March.

"It would be great if we could get to that point by then," he said.


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