June Swoon: Atlantic City profits fall 1.5 percent

Jul 10, 2001 12:09 AM

Atlantic City’s dozen casinos reported a 1.5 percent decline in gross gambling revenue for June.

The industry won $372.4 million from gamblers last month, a decrease of $5.8 million compared to June 2000, according to unofficial figures obtained by The Press of Atlantic City.

The casinos kept 15 percent of the money exchanged into chips at the gaming tables, slightly lower than normal. During the same month last year, the casinos held 17.9 percent ”” the highest citywide figure in at least 14 years, according to Jefferies & Co. analyst Lawrence Klatzkin.

Table games revenue declined 18.4 percent, or $20.6 million, compared to last June. The downturn wiped out the industry’s best month this year in slot-machine earnings, which increased 5.7 percent to $276.9 million.

Every casino except Claridge reported an increase in slot revenue.

“In our view, the growth in slot revenue is an important market statistic,” said Goldman Sachs analyst John Kempf. “It is a better indication of volume and visitation.”

Local casino revenue has now declined in four of the last six months. At the halfway point of 2001, the citywide casino revenue was $2.1 billion, or 0.9 percent behind last year’s pace. The industry has never experienced an annual revenue decline in 23 years.

“We continue to believe that the slowing economy is having a negative impact on Atlantic City,” Bear, Stearns & Co. analyst Jason Ader said. “This has primarily come from the table side of the business, which is typically more susceptible to a downturn in the economy.”

Bally’s reported the biggest revenue increase in June, up 12 percent to $46.4 million. The company enjoyed a big swing of good luck at the tables and a strong increase in slot business.

Trump Taj Mahal nosed out Bally’s as revenue king with $47.5 million, down eight percent. Gaming tables were good, but well below the unusually high hold of 23 percent from the previous year.

Decreased table wagers at Trump Plaza offset the casino’s 10.2 percent increase in slot business, which was the best growth in the city.

Caesars reported the steepest revenue decline, down 14.5 percent to $39.6 million, due to a dramatic swing of bad luck. The casino held 10.5 percent at the tables last month, compared to 21.6 percent last year.

Simulcasting revenue for June was $925,000, down 6.1 percent.

Casino interest

Connecticut officials adopted a nonbinding resolution stating its willingness to negotiate with the Golden Hill Paugussetts Tribe for construction of a Bridgeport casino.

The City Council is considering the proposal from the tribe. The resolution is based on several conditions, including federal certification of the Indian tribe’s status.

“We have to move this city forward,” said Bridgeport Councilwoman Auden Grogins. “We’ve had some negative publicity lately and this is a goodwill effort to show our support for a future casino.”

The city of Shelton has asked the U.S. Bureau of Indian Affairs to allow its comments on the tribe’s application for recognition. City officials cited potential increases in traffic and crime.

“I’m not the biggest supporter of a casino in Bridgeport,” said council member Robert Walsh. “But on the other hand, Bridgeport needs good-paying jobs. Bridgeport needs new tax revenue. Bridgeport needs a break.”

Caesars “trumps” strike

Park Place Entertainment Corp., began permanently replacing striking Caesars slot-machine attendants, who picketed the casino and urged gamblers to play next door at Trump Plaza.

The slot attendants, a bargaining unit of 190 members belonging to Teamsters Local 331, earn between $8.60 and $13 an hour depending upon their experience. Attendants are responsible for refilling coin hoppers, paying jackpots of less than $10,000, making minor repairs to the machines and helping customers.

Local 331 President Joseph Yeoman accused Park Place of union busting.

Trop to expand

The Tropicana Hotel in Atlantic City can proceed with plans to add 500 rooms and other amenities after gaining city council approval.

The $250 million expansion also includes a 2,400 parking garage, conference center, 200,000-square foot retail shopping, dining and entertainment complex to be called The Quarter.

Racetrack bought

Peninsula Gaming Partners has entered into a definitive agreement to acquire 50 percent ownership interest in The Old Evangeline Downs, a racetrack operator said.

The transaction is conditioned upon obtaining financing and regulatory approvals from the Louisiana State Racing Commission and the State Gaming Control Board.

Peninsula will manage the existing track in Lafayette, and will design, construct, manage and operate a new casino and contiguous racetrack facility with pari-mutuel wagering, slots and off-track betting parlors in nearby Opelousas.

The gaming group also owns and operates the Diamond Jo casino, the only riverboat gaming facility in Dubuque, Iowa.

Mexican expansion

Las Vegas-based Nevada Palace has agreed to build a gambling complex in Reynosa, Mexico, just across the Texas border.

Owner Bill Wortman plans to spend $100 million to build a casino and 18-hole golf course in the community of nearly one million people. Reynosa is located near McAllen, Texas.

The project awaits the approval of the Mexican government, which has long-opposed legalized gambling within its country’s borders. However, Mexican President Vicente Fox has said he would support legalized gambling in areas frequented by foreign tourists. A large percentage of the Reynosa residents work low-paying jobs in factories operated by U.S. companies.

Vicksburg set to go

Ameristar’s Vicksburg (Miss.) Casino has completed a $10 million renovation and expansion that adds entertainment, dining and other amenities.

The expansion includes more buffet space, a VIP players lounge, plasma screens throughout the casino, a new poker room, expanded casino cage and a new Bottleneck Blues Bar for live entertainment.

Arizona casinos not closing

Arizona Attorney General Janet Napolitano said tribal casinos in the state aren’t in danger of closing, despite a federal court order that says state law doesn’t permit slot machines, keno or blackjack.

Napolitano said, “there is no court order to enforce the ruling,” and predicted further court cases to help clarify the issue.

A federal judge ruled last week that slot machines, keno and blackjack are illegal in Arizona and declared the state’s Indian gaming compacts unconstitutional.

U.S. District Court Judge Robert Broomfield said Gov. Jane Hull does not have the authority to negotiate new compacts. The legislature would have to pass a new law declaring the compacts legal before new ones could go forward.

The decision was a victory for horse and dog tracks, which were suing to stop the expansion of Indian gaming. The ruling places the economic future of 17 tribes in doubt.

The tribes are promising a fight, saying Indian gaming has strong public support.

Passing the buck

Some Detroit City Council members believe that the future of casinos will likely be delayed until the next mayor takes office.

Council members say Mayor Dennis Archer’s plan to put one casino on the riverfront will be rejected. Archer, who is not seeking a third term as mayor, hasn’t submitted his latest proposal.

The current development agreement relating to Detroit casinos must be amended by Dec. 31 or the three temporary casinos will be forced to close.

A clear consensus against putting any casinos on the riverfront has emerged among leading candidates for mayor.

“As is stands now, there will be no riverfront casinos ”” period,” said City Council President Gil Hill, who is running for mayor.