Making the News

The Record, Bergen County

Originally Published:Sunday, September 2, 2007


Atlantic City casinos hurt by growing competition

By DUNSTAN PRIAL
The Record, Bergen County

The Atlantic City bus trip, for nearly three decades a staple of the North Jersey senior set, has taken an unplanned detour.

As newer and closer entertainment options have opened in New York and Pennsylvania, growing numbers of seniors and other erstwhile Atlantic City regulars are taking their gambling dollars elsewhere.

Primary among the new destinations are so-called racinos -- hybrids of horse-racing tracks and casinos created in an effort to revive long-suffering racing venues such as Monticello Raceway in upstate New York and Yonkers Raceway in Westchester County. In addition, two racinos opened late last year in eastern Pennsylvania, both of them offering North Jersey gamblers shorter drives than Atlantic City.

Meanwhile, the two full-fledged casinos in Connecticut, with their spas, high-stakes poker tables and golf courses, have been stealing gamblers away for more than a decade.

The impact of all this competition on Atlantic City has been jarring. Revenues in 2007 at the city's casinos are expected to decline for the first time since gambling was introduced there in 1978. Through the end of July, the city's 11 casinos had taken in $2.91 billion, down 3.7 percent from $3.02 billion during the same seven-month period a year ago, according to the state's Casino Control Commission.

The racinos, in particular, have proven successful both as life preservers for their parent racetracks and magnets for discontented Atlantic City day-trippers. So it's not surprising that the Meadowlands is pressuring the state to allow slots at the East Rutherford track -- a move vehemently opposed by the powerful casino lobby.

Consider that revenues from the video slot machines at Yonkers Raceway now average more than $8 million a week, or more than three times the $2.3 million generated in October when the slots were added, according to figures from the New York Lottery. Monticello's slots have contributed about $1.5 million a week in revenue since the track became a racino in June 2004.

North Jersey residents are regular contributors to those across-the-border coffers.

Gloria Jeckert said she had a blast on a recent bus trip to Monticello, in the foothills of the Catskill Mountains about an hour-and-a-half northwest of her Paramus home. The senior citizen was effusive in her praise of the array of entertainment options open to her and her fellow day-trippers.

They could partake of Monticello's nearly 1,600 video-gaming machines, or wager on live horse races. The complex also offers a full buffet featuring a carving table, as well as live entertainment.

The lounge singer on the day Jeckert visited "sounded just like Frank Sinatra," she said.

'A challenging year'

The migration has jolted Atlantic City out of decades of complacency.

"It is true that this has been a challenging year for New Jersey's casinos in Atlantic City," said Joseph Corbo, president of the Casino Association of New Jersey, who attributed the downturn to both competition and smoking restrictions imposed on the casinos this year.

Nevertheless, Atlantic City, he said, "is in the midst of a renaissance that is transforming it from a day-trip market into a destination resort" offering upscale restaurants, A-list entertainment, and high-end spas, nightclubs and hotels.

At the forefront of that movement was the 2003 opening of the Borgata Hotel Casino & Spa, a $1.1 billion resort styled after the new mega-hotels of Las Vegas and widely regarded as the template for a new Atlantic City.

Since then, an estimated $2 billion has been invested in the city to spruce things up. Projects have included a $500 million renovation to Trump Entertainment Resorts' three casinos, including the flagship Trump Taj Mahal, and a $245 million upscale dining and retail complex called The Quarter at the Tropicana.

As a result, according to Corbo, Atlantic City is beginning to attract a new breed of visitor, one who "previously chose to travel all day on an airplane to get to Las Vegas instead of driving an hour or two to get to Atlantic City by car.

"Some of these people," he said, "are not that interested in gaming and are adding Atlantic City in their decision mix that might also include South Beach or the Hamptons."

Michael Pollock, managing director of Spectrum Gaming Group, a casino industry consulting firm, sees the competition posed by the new destinations as healthy. "It keeps you on your toes and it forces you to continually look for new markets and new efficiencies," he said.

"It was always anticipated that Atlantic City would have competition. It's just plain common sense that other states would take the same route," Pollock added.

The way Pollock sees it, the racinos are drawing away "low-rolling customers" who don't spend a lot of money and are attracted by the convenience of the closer options, a point that should further motivate Atlantic City to continue its planned evolution into a "destination" similar to Las Vegas.

Seeking something new

Charter bus operators in North Jersey began noticing a shift away from Atlantic City not long after Monticello opened in 2004. The migration strengthened when Yonkers' racino opened last fall, they say.

Ed Vanderhoof, owner of the West Orange-based charter service E. Vanderhoof & Sons, said the groups that charter his buses -- most of them senior organizations, but also churches, community agencies and companies -- are looking for something new.

The seniors especially were getting tired of the same Atlantic City routine: a three-hour bus trip to a casino that probably hadn't changed much in decades.

The racinos at Monticello and Yonkers and in Pennsylvania, according to Vanderhoof, represented a breath of fresh air.

"All the senior groups like them. The women like the slots and the men like the horses," he said.

While Atlantic City remains the most popular destination, Vanderhoof's buses now ferry groups up to Monticello three or four times a month, with trips to the racinos in Yonkers, Philadelphia and the Poconos a little less frequently.

"The people always want to try something different," said Pauline Wolthouse, vice president and part owner of Fair Lawn-based Coachmen International.

Distance also plays an important part in determining where people will spend their gambling dollars.

On a recent afternoon, the parking lot at Monticello was dotted with cars bearing New Jersey license plates. One of them carried friends Barbara Hansen and Peggy Majos, up for the day from their homes in Sussex County.

"It takes an hour to get here. Atlantic City is three hours," Hansen said.

Majos said she was once a regular day-tripper to Atlantic City, either on group bus trips or in the car with her parents. But since Monticello opened, she rarely goes anywhere else.

"Especially with gas prices the way they are, it's a lot cheaper to come up here," she said.

"I'd stay in North Jersey if they'd build a casino there," Hansen added.

Meadowlands slots

If members of the New Jersey Sports and Exposition Authority, the board that oversees the Meadowlands Sports Complex, have their way, Hansen and Majos will one day be traveling to East Rutherford to scratch their gambling itch.

Attendance at the Meadowlands' harness races, which had been slipping for years, took another hit when the video-gaming machines were installed at Yonkers Raceway, prompting gamblers to flock across the Hudson River.

Most members of the NJSEA board -- as well as some powerful state politicians -- support installing similar machines at the Meadowlands to keep horse racing alive in New Jersey.

Governor Corzine has ordered a study, but Meadowlands slot-machine advocates are getting impatient.

"We don't need a study, we need action," said state Senate President Richard Codey. "For us to dilly-dally while Rome burns is horrible. We are destroying an industry."

In addition to siphoning off gamblers from the Meadowlands, the gaming machines at racinos in Monticello, Yonkers and Pennsylvania are allowing those racetracks to increase their purses, Codey said.

Consequently, the better horses are competing in races at those tracks, rather than at the Meadowlands, he said.

"We're not the premier track we once were. If you're a horseman, you have to go where the money is," Codey said.

Opponents of slots at the Meadowlands -- namely the Atlantic City casinos -- argue that in-state competition would send the wrong message to existing and potential investors, specifically the large Wall Street investment banks that are underwriting much of the billions of dollars in construction now under way in Atlantic City.

Corbo, of the Casino Association of New Jersey, was emphatic: Meadowlands slot machines "would be a critical mistake for the state to make for many reasons, not the least of which [is] that this would undoubtedly have a chilling effect on the billions of dollars that are poised to be invested in Atlantic City over the next five to 10 years," he said.

"Meadowlands slots would also further erode casino-gaming revenues, leading to the loss of thousands of jobs and significantly reduced expenditures on goods and services with our thousands of New Jersey-based vendors," Corbo added.

It remains unclear where lawmakers will come down on the issue. Anyone want to bet?

E-mail: prial@northjersey.com

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