A.C. casinos take a hit amid rising competition

ATLANTIC CITY - The resort casinos' peak season was definitely off-peak in 2007. Their take was down 5.9 percent last month compared with August 2006.

The New Jersey Casino Control Commission yesterday reported a $465.2 million "casino win," or the amount gamblers lost, at the 11 gaming halls. Only three casinos - Caesars, Harrah's Marina and Trump Taj Mahal - reported revenue increases, while four casinos - Resorts, Showboat, Tropicana and Trump Marina - reported double-digit declines.

Gambling experts say smoking restrictions that took effect in mid-April, intensifying slots competition from Pennsylvania and New York, and a divisive unionization drive among the city's 8,000-dealer workforce made for one of Atlantic City's most challenging summers since its first casino opened in 1978.

"The trend continues to be disappointing overall," said Andrew Zarnett of Deutsche Bank AG of New York. "One would expect August to be a strong month given the local population at the Shore and that being a peak time for Atlantic City historically.

"But this August wasn't," he said. "Pennsylvania's impact is clearly unquestioned, and that impact will continue to worsen as Pennsylvania grows its slots capacity over the next two years."

The summer season typically accounts for more than 50 percent of Atlantic City's total annual revenue. The biggest loser last month was Trump Marina with a 13.9 percent total revenue decrease, while Caesars reported an industry leading 10.8 percent gain.

"The good thing about having tough years like this is it forces the market to look at itself very hard and make the tough decisions that you have to reinvest in yourself with product that is going to keep fresh and people wanting to come back," said Larry Mullin, president and chief operating officer of the Borgata, which took in $69.98 million, a 4 percent decrease. Slot machine revenue there was down 10.7 percent, while table games revenue went up 7.2 percent.

"For a long time, slot machines were the only thing, the main thing," Mullin said. "They still are the majority of what happens in Atlantic City, it's just they can't be the entire focus."

Indeed, slot machine revenue decreased 11 percent overall in Atlantic City last month, while table game revenues increased 8.2 percent. Slots accounted for 69.5 percent of the month's total revenue, or $323.5 million. Table games made up the rest at $141.7 million.

The five slots parlors in Pennsylvania reported $103.1 million in revenue for August. From that, 55 percent is paid in taxes to Pennsylvania. By comparison, New Jersey charges a 9.25 percent tax on casinos' gross gambling revenue.

"The operating slot machine facilities continue to perform well, and Pennsylvanians are reaping significant dividends," said Doug Harbach, spokesman for the Pennsylvania Gaming Control Board, which is in charge of regulating the state's nascent industry. "Since the first opening last November, over $384 million in taxes have been generated along with an additional $450 million in licensing fees."

Inside the Trump Taj Mahal yesterday, Donald J. Trump's flagship casino, Tomek Salamon made no bones about why he thinks the casinos here were hurting: restrictions that confined smoking to 25 percent of the gaming floors.

"Everybody smokes, so it definitely has an effect," said Salamon, 27, as he sat in the designated smoking area for slots. "I've had to selectively pick where to sit because I like to smoke, too."

Mark Juliano, chief executive officer of Trump Entertainment Resorts Inc., which controls the three Trump casinos, said Atlantic City's future lies with building more hotel rooms "to cultivate that three-hour player into a three-day player."

Atlantic City has about 14,500 casino hotel rooms compared with more than 130,000 in Las Vegas.

"The biggest impact has been felt already, and I think it will continue to dissipate," Juliano said of Pennsylvania slots. "The big story for us is that we are really seeing the benefits of our flow through . . . as we continue to work on that better quality customer and producing much better bottom-line results."

Too much emphasis on the bottom line amid shrinking employee benefits is why Atlantic City's table-game dealers, slot technicians and gaming cashiers are unionizing, according to United Auto Workers members. Four casinos - Caesars, Trump Plaza, Bally's and Tropicana - have opted to have the UAW represent them.

As for the slots, more competition is looming. Pennsylvania's sixth slots parlor - the $360 million Mount Airy Resort & Casino, owned by Scranton businessman Louis DeNaples - is scheduled for an Oct. 15 opening as the state's first land-based full-service casino with slot machines, hotel rooms on a lake, restaurants, and retail shops.

Two gambling halls are planned for the Philadelphia waterfront by SugarHouse Gaming and Foxwoods Development Company L.L.C., with the first one set to open by early 2009 by SugarHouse Gaming of Chicago.

Abby Chrest, a slots player from Bel Air, Md., who hasn't yet tested her luck in Pennsylvania, said one way for Atlantic City to keep her business is to keep showering her with freebies.

"This is . . . a good get-away," Chrest, 23, said at a slot machine at the Atlantic City Hilton casino yesterday. "We get free rooms and free food.

"You can't beat that."