Making the News

Press of Atlantic City

Originally Published:Saturday, January 10, 2009
http://www.pressofatlanticcity.com/186/story/368369.html

Atlantic City casino revenue plunges for second straight year

By Donald Wittkowski
Press of Atlantic City

ATLANTIC CITY - Ray Waszkiewicz felt a little lonely while sitting all by himself amid row after empty row of slot machines at Trump Taj Mahal Casino Resort.

The 78-year-old retired machinist, who hops a bus at his home in Saddle Brook, Bergen County, for monthly gambling trips to Atlantic City, could never remember it being so quiet on the casino floor.

"It's almost empty," he said. "There are fewer and fewer people. There is hardly anybody here. It used to be so crowded."

With the country in an economic tailspin and people cutting back on their gambling budgets, Atlantic City casinos suffered their second straight year of lower revenue in 2008 - a stunning 7.6 percent decline.

Figures released Friday also showed a dismal December in which revenue plunged 18.7 percent, the biggest monthly drop in the city's 30-year history of legalized gambling. Previously, the worst month ever was a 15.1 percent decline set in September.

Altogether, the 11 casinos posted $4.55 billion in revenue last year, compared to $4.92 billion in 2007 and the record haul of $5.22 billion in 2006. Slot winnings slumped 9.6 percent to $3.13 billion and revenue from table games was off 3 percent to $1.41 billion.

Until 2007, casinos enjoyed 28 consecutive years of revenue growth. The results for 2008 marked the lowest annual casino "win" since the $4.49 billion posted in 2003.

Harrah's Resort, coming off a $550 million expansion that added a new 960-room hotel tower, was the only casino that had higher revenue for the year, up 4.9 percent to $544.7 million. Borgata Hotel Casino & Spa led the industry with $738.8 million in revenue, but it was down 1.6 percent compared with 2007.

The Atlantic City Hilton Casino Resort, the city's smallest gaming hall, had the biggest revenue decline at 18.3 percent. Revenue also tumbled by double-digit margins at Resorts Atlantic City, Trump Marina Hotel Casino, Tropicana Casino and Resort, Bally's Atlantic City and Showboat Casino Hotel.

Gaming executives blamed the recession, competition from Pennsylvania slot parlors, high gas prices over the summer and Atlantic City's casino smoking restrictions for driving down business.

"Obviously, it's a much broader challenge than just the casino business in Atlantic City," Dan Nita, regional president of the four Harrah's Entertainment Inc. casinos, said of the nation's grim economy.

Prospects for 2009 already appear bleak. Few are willing to bet on a quick turnaround because the economic crisis has sapped consumer confidence and discretionary spending for casino outings.

"I think 2009 will be a tough year," conceded Linda M. Kassekert, chair of the New Jersey Casino Control Commission, the state agency that regulates Atlantic City's gaming industry. "People are just not spending casino dollars."

Richard Perniciaro, director of business research at Atlantic Cape Community College, said people will be slow to return to the casinos even if the country emerges from the recession with the help of government stimulus programs.

"I just don't think that casino gaming is the first place people will go back to when we come out of the recession," Perniciaro said. "It's the discretionary income for most people. They will put their money back to pay off their debt, even if they get a stimulus check."

Spectrum Gaming Group, a casino consulting firm based in Linwood, is forecasting that revenue will drop anywhere from 2 percent to nearly 8 percent in 2009, depending on the depth of the recession. At the start of 2008, Spectrum had predicted 2.2 percent revenue growth for the year, but noted that the economic downturn became far worse than anticipated.

Casinos will be challenged to draw customers to a resort town that will feature no new major attractions this year. Harrah's Resort, Borgata and the Taj Mahal all opened new hotel towers last year, but no expansion projects are in the pipeline for 2009.

A proposed $10 billion building boom touted early in 2008 went bust later on, with three Las Vegas-style megacasinos being delayed or scrapped because the frozen credit markets left no funding for construction.

Since no must-see attractions are coming this year, the casinos will once again be forced into offering hundreds of millions of dollars in promotional giveaways - the so-called "comps" such as free hotel rooms and cash-back deals - to give customers an incentive to gamble.

"I come here only when they give me something," Johnny Blue, 59, a retired investment banker from New York, said at the Taj Mahal. "I want comps. I want the free rooms, the free meals, the free shows and the free slot play."

Blue, who was virtually alone Thursday afternoon while playing a $5 machine in the Sultan's Palace slot area, pointed out it was not the first time that the casino had seemed like a ghost town.

"I've been here at 2 or 3 o'clock in the morning and I was the only one," he said.

 

E-mail Donald Wittkowski:

DWittkowski@pressofac.com

 

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