News for the Hospitality Executive
|By Suzette Parmley, The Philadelphia Inquirer
Knight Ridder/Tribune Business News
Jan. 10, 2004 - Bolstered by a fancy new billion-dollar entrant, casinos had their best year ever since gambling started in Atlantic City 25 years ago.
Year-end revenue reached nearly $4.5 billion for 2003, up 2 percent from the previous year's take, according to figures released yesterday by the Casino Control Commission.
Much of the growth was attributed to the Borgata Hotel Casino & Spa, a Las Vegas-style mega-casino and resort that debuted July 3 as the city's first new casino in 13 years.
Despite a first-half decline, the industry set an annual record.
"The year started off slowly, particularly because of last winter's harsh weather, but revenues picked up strongly after the opening of the Borgata," Casino Control Commission chairwoman Linda Kassekert said.
Atlantic City casinos' best two months since gaming was legalized in 1978 were last July, with $436 million, and August, with $475 million, both after the Borgata's entry.
Leading the pack in casino wins for the year was the newly merged Bally's Atlantic City and Claridge Casino Hotel, which took in $678 million. Caesars was second, with $519 million, and Trump Taj Mahal finished third, with $517 million.
For December, the Borgata came second to Bally's-Claridge in total casino win with $37.9 million.
Table-games revenue increased nearly 4 percent to $1.2 billion for the year, while slot-machine revenue rose 2 percent to $3.3 billion.
Wall Street gaming analyst Lawrence A. Klatzkin, managing director of Jefferies & Co. Inc., said the Borgata had not induced overall market growth as much as expected, but it still had made its mark.
"I was hoping, as a market, Atlantic City would have grown a little more," Klatzkin said. "It's definitely made a move in the right direction. Borgata's numbers are coming in line with what we were expecting with the first six months.
"It takes time to grow the market," he said. "It does not happen overnight just because you open something."
Bally's-Claridge led both the year and December in slot-machine winnings, with $31.8 million in December and $496 million for the full year. Harrah's came in second for the full year with $405 million.
Fueling the table-games revival was the Borgata, which ranked first in table-game winnings for December with $17.4 million. Trump Taj Mahal was second at $15.8 million.
"We are very happy with our first six months of operation, and we will continue to work hard on improving our performance," Borgata executive vice president Larry Mullin said. "As for December, considering the weather, and the fact there was one less Friday than the prior year, and that New Year's Eve fell in the middle of the week, the market performed fairly well."
But the Borgata -- which took in $267 million for the year -- also was blamed for cannibalizing the market, as seven of the 12 casinos reported revenue declines from the previous year.
Despite the Borgata's adding to the entertainment and dining venues, it wasn't enough to meet demand, Klatzkin said. "To get a dinner reservation at the Borgata on the weekend is nearly impossible," he said.
"I'm hopeful that, with Aztar's expansion [the corporate parent of Tropicana] by adding rooms, entertainment, restaurant and parking capacity, and with Resorts adding rooms -- that might be what's needed for the final piece of the puzzle," Klatzkin said.
Having a new player in town has been particularly rough on the two independent casinos -- Resorts Atlantic City Casino Hotel and Sands Casino Hotel. Each was down about 11 percent.
"Certainly there's been an impact," Kassekert, the casino commission chairwoman, said. "It's happened whenever a new casino opens. It happened when the Taj Mahal opened" in 1990.
"It's difficult to grow the market by such a huge amount without taking [players] from those already here," she said. "Obviously, those who come down here may try it [the Borgata], but not necessarily mean they are going to stay there."
The city's 12 casinos paid $358.5 million in taxes on their gross revenues, which goes directly into the Casino Revenue Fund. In addition, they incurred $56 million in reinvestment obligations -- projects approved by the Casino Reinvestment Development Authority.
For December, gross revenues increased nearly 3 percent over the same month last year to $320 million.
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(c) 2004, The Philadelphia Inquirer. Distributed by Knight Ridder/Tribune Business News. BGII, CZR, DJT, JEF,