Report: Grim Outlook For Atlantic City Casinos
ATLANTIC CITY, N.J. (AP) -- A new report paints a grim picture of 2011 in the nation's second-largest gambling market.
The research report by a major casino analysis company predicts Atlantic City's 11 casinos will continue to lose money and market share this year, even as the competition all around them prospers.
The Spectrum Gaming Group report predicts Atlantic City's casino revenue will fall more than 13 percent this year, while the seven casinos in eastern Pennsylvania, along with those in New York, Delaware and Maryland will increase their revenue by nearly 27 percent.
That's mainly because other states continue to add casinos, while there's nothing new on the horizon in Atlantic City this year.
The report projects that Atlantic City will have lost a staggering 41 percent of its business since 2006.
"There are a lot of challenges ahead for Atlantic City," said Shawn McCloud, director of financial analysis for the Linwood, N.J.-based Spectrum. "You'll still have some performers like the Borgata and Harrah's that are well-capitalized that will weather the storm. But as a market, Atlantic City is not going to see the income stream like they did in the good old days, four or five years ago.
"A lot of the reason for that grim forecast is there's no catalyst in sight to turn that around," McCloud said. "There's no new casino opening this year, no one is adding a major hotel expansion. There's no spark for Atlantic City this year."
Analyzing historical trends and assessing the current casino market in the Northeast, the firm projected that Atlantic City's 11 casinos will see their 2011 revenue fall to $3.09 billion, down from the $3.57 billion they registered in 2010. That would mark a 13.3 percent decline.
But the other mid-Atlantic casino states should see their revenue grow from $3.33 billion last year to $4.23 billion at the end of this year, an increase of 26.9 percent.
Slot machines, which are Atlantic City's bread and butter, accounting for roughly two-thirds of the seaside resort's gambling take, are projected to fall from $2.47 billion last year to $2.18 billion, a decline of 11.8 percent. Table games in Atlantic City are projected to fall from $1.09 billion to $911 million, a decline of 16.7 percent.
Contrast that with projected slots revenue growth in the other mid-Atlantic states from $3.14 billion last year to $3.66 billion this year, an increase of 16.6 percent. And table games growth in the other states will be off the charts this year, largely because they debuted last summer, and this will be the first full year of games like roulette, craps, blackjack and others. The report forecasts an increase of more than 190 percent, from $198 million last year to $576 million this year.
Atlantic City casino executives are already bracing for 2011 to be a difficult year. One casino, Resorts Casino Hotel, narrowly avoided having to shut down last month and was sold for a relative song, $31.5 million. That's by far the lowest price ever paid for an Atlantic City casino.
Another distressed property, the Atlantic City Hilton Casino Resort is the subject of a court battle over whether a receiver should be appointed to run the place, and a similarly discounted sale is being discussed.
"We think the Spectrum report is probably pretty accurate," said Bob Griffin, CEO of Trump Entertainment Resorts, which owns three casinos here. he is also president of the Casino Association of New Jersey, the industry's trade group. "Clearly competition in surrounding states has had an impact on Atlantic City and will continue to have an impact. New York will be adding more gaming.
"But we do think this will be a good summer at the shore, and we're still looking at the second half of the year as a glass half-full," Griffin said. "We are optimistic about the second half of the year."
Jeff Vasser, president of the Atlantic City Convention and Visitors Authority, said the resort has plenty of things going for it this year, particularly non-gambling attractions.
"While the gaming industry has indeed suffered nationwide, we have been working to broaden our appeal to showcase world-class entertainment, restaurants, golf, spas and shopping, among other assets," he said. "While we do not have new casinos scheduled to open in 2011, we continue to have tremendous brand recognition and expect to strongly market the destination and its unique advantages over our competition."
That competition continues to ramp up all around them. The report projects that Pennsylvania's seven eastern casinos will increase their revenue more than 25 percent to nearly $2.7 billion.
A new casino at the Aqueduct Racetrack in New York City is due to open this spring, and the Empire City Casino at Yonkers Raceway continues to post annual increases in slot revenue. The report projects 32 percent revenue growth for New York, to $771 million.
Delaware is projected to increase 6.1 percent, to $610 million, and the Hollywood Casino in Perryville, Md., is projected to see its revenue soar to $164 million in its first full year of operation this; (it opened last fall).
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