Casinos continue to be hit by economy, competition

//August 24, 2009

Casinos continue to be hit by economy, competition

//August 24, 2009

Pa. sees slots revenue increase as Atlantic City suffers.It was another difficult quarter for New Jersey’s casinos, with profits down 19.8 percent and revenue dropping 15.2 percent.

The New Jersey Casino Control Commission reported that Borgata was the only one of the state’s 11 casinos to have gross operating profits increase from April to June over the same period a year earlier.

Casino profits totaled $198.4 million for the three months, dropping from $247.3 million in the same period from 2008. Once interest, taxes, depreciation, amortization and charges from affiliates are subtracted, the industry reported a net loss of $591.6 million for the period.

And while the number of occupied hotel rooms increased by 2.7 percent, 1,000 new rooms have come online this year, sinking the occupancy rate to 84.6 percent from 91.3 percent.

Gaming revenue has been declining across the country, said John O’Neill, a gaming expert and professor of hospitality management at Pennsylvania State University.

But one state where revenue was up was Pennsylvania, where casinos have been drawing slots patrons.

The Pennsylvania Gaming Control Board reported the state’s slots casino gross revenue increased 17.9 percent in the second quarter, from $419.2 million in 2008 to $494.2 million in the same period this year.

Pennsylvania added one slots casino in that time, for a total of eight. The two states’ statistics include different information, and aren’t directly comparable.

O’Neill said the potential addition of table games to Pennsylvania’s casinos could further harm Atlantic City, but not as much as the initial offering of slots. In the long run, he said, New Jersey casino revenue should improve.

“After this initial hit, I think New Jersey will experience some improvements, and I think New Jersey will continue to see improvements with the development of unique gaming properties with broad tourist appeal and competitive advantages — such as strong entertainment offerings, like the Revel project is anticipated to have,” O’Neill said. Construction on the Revel casino is under way in Atlantic City.

New Jersey isn’t the only northeastern state where long-established casinos are suffering. Foxwoods, the largest casino in Connecticut, reported its worst July for slot-machine revenue since 1995. Connecticut saw its revenue from Foxwoods and the Mohegan Sun casinos rise steadily from Foxwoods’ opening in 1993 through 2007, but it has fallen sharply in the past two years.

E-mail Andrew Kitchenman at [email protected]