Pennsylvania up, New Jersey down in gambling-revenue report

Michael Lee (left) and Johnny Mac, both from Wayne, play blackjack at the new Valley Forge Casino Resort. Pennsylvania’s total casino revenue increase last year was the country’s third-highest. CLEM MURRAY / Staff Photographer
Michael Lee (left) and Johnny Mac, both from Wayne, play blackjack at the new Valley Forge Casino Resort. Pennsylvania’s total casino revenue increase last year was the country’s third-highest. CLEM MURRAY / Staff Photographer
Posted: May 11, 2012

Pennsylvania had one of the nation’s largest gaming-revenue increases last year, while New Jersey — marked by Atlantic City’s ongoing problems with new competition — reported the biggest decline in revenue, according to an economic-impact study released Wednesday.

For the second year in a row, revenue from U.S. commercial casinos increased, rising 3 percent last year to $35.6 billion, to continue the recovery that began in 2010, according to the annual State of the States report by the Washington-based American Gaming Association.

Of 22 states that have commercial casinos (those that are non-tribal), revenue increased from 2010 in 15, said Frank J. Fahrenkopf Jr., president and chief executive of the association.

The increases were driven in part by an improving economy and a rise in consumer spending, he said.

“While the recovery is ongoing and the commercial casino industry is not monolithic, the data paint an optimistic picture,” Fahrenkopf said during a conference call with reporters Wednesday.

Pennsylvania’s total casino revenue increased more than 21 percent last year, to about $3 billion, the third-highest increase after Maryland (up 464.2 percent after the opening of its first two casinos in fall 2010 and early 2011) and Kansas (up 28.3 percent).

“SugarHouse helped drive revenue and jobs in Pennsylvania,” he said, referring to the casino on Penn’s Landing that opened Sept. 23, 2010. “The Pennsylvania market is one of the real success stories of the last couple of years. Many people feel the Northeast has been underserved, and that is probably a reflection of that. Those who like to play slots no longer have to drive an hour to Atlantic City.”

As a result, last year was not a pretty picture for the 11 casinos at the Shore. New Jersey’s gaming revenue dropped 7 percent, to $3.32 billion, the biggest drop in the country by percentage, edging Mississippi, whose revenue was down 6.3 percent.

“New Jersey experienced the largest decline,” Fahrenkopf said. “But 2012 could be a good year, as the opening of Revel could turn things around.

“It’s an exciting property, and everyone is watching how it will impact the landscape of Atlantic City,” he said of the new $2.4 billion casino. “But we’re waiting to see what the long-term impact will be, especially with the governor’s approach with a public-private partnership.”

Last year, Gov. Christie created a state-run tourism district in Atlantic City to help revive its struggling casino and tourism industries.

Revel, which began an eight-week preview April 2, reported $13.4 million in total gaming revenue for its first full month in operation on Wednesday. By contrast, Borgata generated $47 million for its first full month after opening July 3, 2003.

Though Revel’s numbers were below expectations, industry analysts said that only some of the mega-casino’s amenities were open and that not all of its 1,898 rooms were available.

The first test of the casino, they said, will come after Revel’s Memorial Day weekend grand opening, which will feature Beyoncé in its new 5,050-seat Ovation Hall.

“Although it is too early to judge the success of Revel based on one month’s revenues following a soft opening, gaming revenues of $13.4 million are underwhelming,” analyst Andrew Zarnett, of Deutsche Bank A.G., wrote in a note Wednesday. “As we head into the busy summer months, gaming revenues for Revel will need to dramatically improve, and we believe they will.”

The gaming association’s national report showed significant growth in many states where casinos opened or had their first full year of operation, including Florida (16 percent), New York (15.6 percent), and Illinois (8 percent).

In Maryland, which opened its first casino in Perryville in fall 2010 and a second one in Berlin in early January 2011, gross gaming revenue rose to $155.7 million from $27.6 million.

In Nevada, the nation’s largest gambling market, hit hard by the recession and cutbacks in routes there by airlines, gaming revenue rose 2.9 percent and the number of visitors increased by more than a million.

The association’s annual report also provided a snapshot of tax contributions, employment, and wage figures for the 22 states with casinos.

New Jersey, which taxes gross gambling revenue at 9.25 percent, took in $277.6 million in gaming-tax revenue, which went toward programs to aid seniors and the disabled, as well as to redevelopment projects. The 11 Atlantic City casinos employed 32,823 last year.

Pennsylvania, which taxes gross slots revenue at 55 percent and table-games revenue at 16 percent, generated close to $1.5 billion in gaming-tax revenue, which went toward property-tax relief, increased purses for the horse-racing industry, economic-development projects, and payment to host communities. The state’s 10 casinos last year employed 13,050.

Overall, the gaming industry directly employed more than 339,000 people nationally who earned $12.9 billion in wages, tips and benefits and contributed $7.9 billion in tax revenue to communities, or 4.5 percent more than in 2010.

More than one-quarter, or 27 percent, of the U.S. adult population visited casinos last year, according to the report.

Of those, more than a quarter, or 27 percent, said they never or rarely gamble. Instead, they either dine, enjoy live entertainment, shop, or do something else besides play the slots and table games.

“The nongaming spend, with a quarter saying they never gamble and are doing something else, is a really important element moving forward,” Fahrenkopf said.

Contact Suzette Parmley at 215-854-2594 or sparmley@phillynews.com.

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