Amid growing alarm in Atlantic City, monthly revenue report is a mixed bag for casinos

Joshua Burd//November 15, 2014//

Amid growing alarm in Atlantic City, monthly revenue report is a mixed bag for casinos

Joshua Burd//November 15, 2014//

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With four Atlantic City casinos having closed this year and another in danger of going dark next month, the properties that remain appear to be reaping the benefits.The latest report from state regulators shows that seven of the city’s eight remaining casinos saw gaming revenue increase in October when compared with the same month in 2013. Six of those gaming halls recorded double-digit upticks, with Tropicana leading the pack with a 71 percent spike, to nearly $24 million, from $13.8 million.

Still, overall casino winnings for the city fell 4.4 percent in October, to $207 million, continuing a steady decline since the market’s peak in 2006.

The report came during a week in which Atlantic City’s struggles were top of mind for government and business leaders. This week, Gov. Chris Christie’s top adviser on the gaming industry released a new report that painted a dire picture for the resort town, along with several recommendations for addressing its issues.

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The findings by the adviser, the real estate industry leader Jon Hanson, noted the city’s gaming revenue has fallen from its 2006 peak of $5.2 billion to just $2.9 billion in 2013, as competition from neighboring states continues to grow. This year, gaming revenue is projected to be $2.5 billion.

That has crushed Atlantic City’s tax base, the report noted, with total assessed property values having fallen 45 percent since 2008 and the municipal tax rate jumping 101 percent over the same period. Meanwhile, Atlantic City has continued to issue bonds largely to cover tax appeals and deficit spending in budgets.

The report called for several recommendations, including the immediate appointment of an emergency manager with “extraordinary supervisory powers under the Local Government Supervision Act” along with tax, school and pension reform. It also called for the regionalization or privatization of certain public services.

Hanson’s four-member commission also recommended the creation of a nonprofit development company modeled after the New Brunswick Development Corp., which has overseen that city’s revitalization over the past two decades. Such an entity would be funded in part by redirecting some of the casino revenues that now fund the Atlantic City Alliance, the 3-year-old marketing arm responsible for the “Do AC” campaign.

The report said the marketing “has increased awareness and interest in Atlantic City, but return on investment is below expectations and does little to affect urgent structural needs of the city.” Indeed, the casino executives who make up the board voted this week to ask state lawmakers to disband the organization.

“Individually, we’re over it,” Tom Pohlman, general manager of the Golden Nugget, told The Philadelphia Inquirer. “As a group, as we look at the cost structure, we have to bring it down. We voted that we abolish the Atlantic City Alliance, do away with it.”

The recommendations from Hanson’s group followed the second stakeholder summit hosted by Gov. Chris Christie that focused on the city’s future.

RELATED: 2nd A.C. summit’s recommendations include emergency manager, partnerships, tax reforms

So Thursday’s report on gaming revenue — despite showing an overall decrease for October — was perhaps the lone bright spot this week for the remaining casinos. It comes after a painful summer for the resort town: Showboat, Revel and Trump Plaza all closed in a three-week span starting in mid-August, following the shutdown of the ailing Atlantic Club in January.

At the time, experts largely agreed the market was overbuilt with gaming options and needed to be right-sized.

The report by the state Division of Gaming Enforcement also showed a strong uptick for the Golden Nugget, which saw a 67 percent gain in gaming revenue for October. Of all current operators, overall gaming revenue rose 19 percent.

The only casino to decline in October was Trump Taj Mahal, which ownership said is in danger of closing next month without concessions from its main union.