Casinos continue tailspin

Jun 19, 2007 2:51 AM

For the first time in its 29-year history, Atlantic City’s gambling industry will probably rake in less money than it did the year before.

Gaming revenue in the city’s 11 casinos declined 5.5 percent in May, the fourth month this year that revenue has declined from the previous year.

In addition to the closing of the Sands last November, the fierce competition from slot parlors in adjoining states continued its battering of Atlantic City.

Overall, casinos won $408.8 million from gamblers in May. Slot machine revenue decreased 7 percent, to $294 million, as gamblers flocked to slot parlors closer to their homes in Pennsylvania and New York.

But table games, which are not offered at racetrack casinos in nearby states, were not immune either. Table revenue dropped 1.4 percent to $114.8 million.

Officials attributed the latter to bad luck.

"It’s not good news," said Susquehanna Financial Group analyst Robert LaFleur, who suggested high gas prices could also be taking a toll, as well as a partial smoking ban that went into effect April 15.

But overall, analysts and casino executives agree that competition from racetrack casinos or "racinos" — particularly two in suburban Philadelphia and one in Yonkers — was the main reason for the decline.

The racinos started opening in late 2006. And Atlantic City casino revenue has fallen every month this year except for March, when it increased only slightly, by 1.3 percent.

Until April, when revenue plunged 10 percent, industry officials had hoped competition would be a temporary setback, and the numbers would rebound in the spring.

Now many think the hemorrhaging will continue into the summer.

To try and stop the bleeding, some casinos have increased freebies or "comps" to gamblers — free show tickets, meals and rooms.

According to published reports, seven casinos have handed out comps faster this year, hoping to hold onto customers who now have other gaming options.

But four casinos have actually cut back on their comps as a way to make up for declining revenue. Apparently these four don’t believe in the "you have to spend money to make money" economic theory.

Although disappointed by the May results, consultant Shawn McCloud, vice president of analysis for the Spectrum Gaming Group, said summer could still bode well for A.C.

The one thing slot parlors in suburban Philadelphia and in Yonkers can’t offer is views of the ocean, he said.

"I wouldn’t write it off yet," McCloud said. "But they certainly have a way to go."