N.J. casinos facing new risks Pa.'s plan to add slots and industry consolidation confront the vital South Jersey industry.

Posted: January 07, 2005

Consolidation among casino operators in Atlantic City and looming competition from Pennsylvania are the two biggest uncertainties facing the gaming industry that employs more than 50,000 people in South Jersey.

"We need to continue to evolve ourselves as a regional destination," Timothy J. Wilmott, chief operating officer of Harrah's Entertainment Inc., said at yesterday's quarterly business outlook program in Cherry Hill. Adding hotel rooms, shopping and entertainment is critical to Atlantic City's future, he said.

The forum, sponsored by Rutgers University School of Business in Camden, highlighted other regional economic sectors. Besides casinos, the banking industry had a solid year in 2004.

South Jersey continues to benefit from a diversified economy, Stuart Hoffman, PNC's chief economist, said.

State Treasurer John E. McCormac said New Jersey was fourth in job growth last year, behind California, Texas and Florida.

He listed other highlights, such as the creation of 71,500 jobs in the last 12 months and a 4.4 percent unemployment rate, which has been below the nation's rate for 19 consecutive months. Today, the federal government will release employment numbers for December.

Despite the rosy employment picture, McCormac remains wary of the economy's direction. "We've been cautious on spending, and we've frozen a lot of money . . . because we don't know fully what our revenues are," he said.

Rising employee health-care costs will continue to affect all industries and force employers to make tough choices, said William F. Haggett, president and chief executive officer of AmeriHealth Insurance Co., an HMO and subsidiary of Independence Blue Cross.

Low interest rates for 15-year and 30-year fixed-rate mortgages have been a boon for the banking industry, said John E. McWeeney Jr., market president of Bank of America Corp., in southern New Jersey.

"We're looking at steady, moderate growth," he said. "It's a tremendous time to be a consumer."

McWeeney said increased competition and expanded distribution networks would spur further banking consolidation, such as Bank of America's acquisition of Fleet Bank last year.

"There are advantages to scale," he said, "certainly, when you're trying to invest in technology, and when you're trying to build a brand."

Atlantic City is not immune to consolidation. Harrah's Entertainment Inc.'s pending acquisition of Caesars Entertainment Inc., announced in July, would make it the largest gambling company in the world, and the largest casino operator in Atlantic City.

Last summer, the Pennsylvania General Assembly approved putting 61,000 slot machines in 14 venues throughout the state. Gaming analysts predict that the advent of slot parlors in Southeastern Pennsylvania could siphon as much as 10 percent of Atlantic City's annual revenue.

Wilmott, of Harrah's, said Atlantic City was preparing for the increased competition with the addition of nongaming attractions, such as November's unveiling of The Quarter, a $285 million mega-retail, entertainment and dining complex at Tropicana Casino & Resort.

Yesterday, the Showboat Casino-Hotel announced that it was adding a House of Blues, a $65 million entertainment, dining and gambling venue to be partly funded by the Casino Reinvestment Development Authority, and to open during Fourth of July weekend.

"The trend of adding nongaming amenities will clearly help us minimize the impact of convenience gaming opportunities currently in states, like Delaware, and soon to be in Pennsylvania," Wilmott said.

Contact staff writer Suzette Parmley at 856-779-3818 or sparmley@phillynews.com.

comments powered by Disqus