Atlantic City casinos could be paying a heavy price in the final quarter of 2003 for the success of the Borgata.
The Press at Atlantic City reported last week that Wall Street investors are warning investors that the gaming industry’s poor September revenues foreshadow an ugly fourth quarter as casinos fight for business lost to the new Hotel Casino and Spa.
"Conditions remain weak, there is little real growth and competitive conditions are intensifying," said John Kempf of Goldman Sachs. " Even more disturbing, we are beginning to see an increase in promotional spending."
Borgata, which opened July 2, increased the city’s supply of slot machines by 9 percent, table games by 11 percent and casino hotel rooms by 16 percent. Although Borgata has quickly become the second highest grossing casino (behind Bally’s), it has helped boost citywide casino revenue by only 5 percent.
"With a full quarter of data now, it is clear that the new casino has cannibalized the rest of the market," said Jake Fuller of Thomas Weisel Partners.
Casinos have already cut nearly 400 jobs since Labor Day.
David Anders of Merrill Lynch predicted a 9 percent cash-flow decline at Tropicana, 8 percent at the Harrah’s Entertainment casinos (Harrah’s, Showboat) and 5 percent for the Park Place casinos (Bally’s, Caesars, Hilton).
Analysts believe results will improve by next spring, when the Tropicana and Resorts expansions open and Borgata normalizes its marketing.
Scheme bilks tribes
A scheme to counterfeit payout tickets that may have bilked a tribal casino out of $100,000 also would have worked at other casinos in the state of Washington, according to gaming officials.
The Seattle Post-Intelligencer reported that the scheme was carried out at the Northern Quest Casino when a gambler bought a bar-coded ticket, then duplicated it on his home computer.
As many as 16 other tribal casinos in the state use similar equipment, the State Gaming Commission stated. The plot was learned when the machine payouts exceeded their programmed winnings, causing excess losses to the casino.
Schumer won’t budge
New York Sen. Charles Schumer said last Thursday he would continue his opposition to the Seneca-Cayuga Tribe of Oklahoma’s bid to build a bingo hall near Syracuse without prior local and state approval.
"I want to get the BIA (Bureau of Indian Affairs) behind us to make sure that they can’t open the bingo hall and flaunt every law in the books," Schumer said. "Secondly, I want the BIA to put something in place so this doesn’t happen in New York state and all over the country."
The tribe says that it has sovereign immunity on the 229-acre site because it falls within the Cayuga Indian land claim to some 64,000 acres of former reservation land around the northern tip of Cayuga Lake.
Slots for Maryland, if taxed
The leader of a Maryland house panel that killed a plan to legalize slot machines said the votes are there for slots next year if part of a broader revenue package that includes a major tax increase.
"We don’t see slots going without another funding source," said. Del. Sheila Ellis Hixson, chairperson of the House Ways and Means Committee. "Our game plan would be if slots move, we would like to see a 1-cent sales tax as a package."
The Washington Post reported that Hixson could see that package raising nearly $1.2 billion a year. That money amount could raise as much as $1.2 billion a year, which would be enough to pay for the state’s landmark public schools initiative.
Arizona gaming looks clean
Auditors looking over Casino Arizona books for two months have found no evidence of malfeasance, according to an Arizona Republic report.
"There isn’t any indication of wrongdoing," said Jacob Moore, spokesman for the Salt River Pima-Maricopa Indian Community, which owns and operates Casino Arizona and Casino Arizona at Talking Stick.
Casino Arizona is among the biggest players in the state’s roughly $1 billion-a-year Indian gaming industry. Nevada-style blackjack was started last February, with slot machines having doubled to about 1,350 in a year.
Gaming off phone cards?
Officials from the Tennessee lottery and law enforcement are checking to see if cash prizes from scratch-off phone cards may amount to illegal gambling.