After the first full year of competition between Atlantic City’s 11casino properties and the slot parlors of neighboring Pennsylvania, the results have proven troubling for Atlantic City operators. Pennsylvania’s slot parlors led the East Coast in revenues.
For the first time since its 1976 legalization, Atlantic City’s annual casino revenues declined. Win, or casino revenue, is the net amount of money won by casinos. It is not profit.
Casinos earned $4.92 billion in 2007, a 5.7 percent drop from 2006. Competition from Pennsylvania and New York were reflected in a slot drop of 8.9 percent and a table games increase of 3 percent. Pennsylvania released fiscal year 2006/2007 slot revenues, which totaled almost $455,000,000
However, numbers rarely tell the whole story. The Atlantic City statistic fails to factor in the closing of the Sands in November 2006, offering one less property for all of 2007.
While not a huge number, it is a wake-up call for the seaside resort town to take action.
Every business has its ebbs and flows, and there are times when you just have to ride the wave out and create plans “B” and “C” as a backup. Atlantic City is clearly at that time, and they’re doing it.
In my former career in the amusement and vending industries, I watched both video games and tobacco sales suffer steep declines in revenues. The home market games and the growing anti-smoking campaigns throughout the US put serious dents into our company’s product categories.
We were faced with two choices – cry foul and lament our losses or take a deep breath, refocus our business plans and strategize how to again capture the market. My father Stan offered life lessons through corny clichés and war stories that always had a moral.
One piece of advice was this: life and business are like a Ferris wheel. We always enjoy being on the top, but what about when the ride goes down? He would say, “Are you going to stay on the ride and buy another ticket until it rises again? Or, are you going to be foolish enough to jump off?“
It was good advice for my career; more importantly, it was good advice for my life. Those of you who know me understand only too well how tenacious I am, often through sheer will and determination.
The Atlantic City casino hierarchy also cannot lose sight of the big picture. Sure, they can worry about the Pennsylvania numbers against theirs. However, it will waste precious time and energy if they do more. They have to “buy another ticket” and push for the ride to rise again.
And, they are. The cranes continue to appear in the skyline, and multiple projects reflecting billions in room, retail, dining and entertainment investments are rising. For example, Harrah’s, Borgata and Trump all have new hotel towers on the boards. The proposed Pinnacle and Revel casinos are set to open over the next few years.
MGM Mirage wants to duplicate its Las Vegas CityCenter project in New Jersey. It plans to develop a mini-city of gambling, hotel towers and luxury condominiums, costing $4.5 billion to $5.5 billion, changing the Atlantic City skyline.
To remain competitive, officials are also exploring the legalization of in-person wagers sports betting on professional sports in special Atlantic City casino parlors. The bill would seek voter approval in November.
Although currently prohibited by United States federal law, a state bill authorizing sports betting has cleared one hurdle. It passed the New Jersey Assembly by a wide margin in early February, and will go to the New Jersey Senate.
If all goes smoothly for the legislators and the voters, New Jersey would challenge the federal government in court. The state would argue the wager ban was an overreach of Congress’s constitutional powers to regulate commerce between states. It could be expedited if supportive leaders are elected in November
Admittedly, New Jersey may be swimming upstream. It had a chance to pass sports betting legislation in the early 1990s, but missed the 1993 federal deadline. Currently sports betting is legal in Delaware, Montana, Nevada and Oregon.
On days of special sporting events, such as Super Bowl, New Jersey could see a huge economic benefit. Super Bowl Weekend, in early February, brought more than 200,000 extra visitors to Las Vegas.

Printer friendly version

Email this article to a friend