A.C. casinos suffer a March revenue dip

The casino floor at Revel, which wants to get itself ready for the Shore's summer season.
The casino floor at Revel, which wants to get itself ready for the Shore's summer season. (AKIRA SUWA / Staff Photographer)
Posted: April 10, 2013

Atlantic City's dozen casinos generated $238.5 million in total gaming revenue last month, down 10.5 percent from March 2012, when 11 casinos generated $266.5 millon.

Figures released Wednesday by the New Jersey Division of Gaming Enforcement reinforced the obvious - that even with the opening of the $2.4 billion Revel in April 2012 and its addition of 2,450 slot machines and 160 table games to the market, Atlantic City's gambling revenue continued to shrink.

Of the 11 gambling halls that had been open a full year in March, 10 saw revenue decline. The exception was the Atlantic Club, with a 32.7 percent revenue increase last month, to $12.6 million. Otherwise, drops ranged from 3.6 percent at Borgata to 30.9 percent at Trump Plaza.

Winter months traditionally bring the slowest business to the Atlantic City casinos and their hotels. Traffic picks up in late spring and peaks in the summer.

March's results benefited from a favorable calendar with one extra Sunday, but were negatively affected by a 20 percent, or $7.2 million, reduction in promotional gaming credits wagered.

On March 25, a week before its first birthday, Revel filed for Chapter 11 in U.S. Bankruptcy Court in Camden.

In advance of the prepackaged filing, owner Revel AC Inc. negotiated a reorganization plan with its creditors. The financial restructuring, which is to be completed within 60 days, is intended to eliminate about $1.3 billion of Revel's $1.5 billion debt through a debt-for-equity swap. A plan to provide $250 million in debtor-in-possession financing to cover the casino's expenses received interim approval March 27, with an April 18 court date set for final approval.

In March, Revel finished 10th among the 12 casinos, with $9.8 million, just ahead of Resorts at $9.3 million and the recently sold Trump Plaza, which came in last at $6.9 million.

"We are heading in the right direction with the 8.9 percent growth in our gross gaming revenues month-over-month, which points to the progress and promotion enhancements in the Revel Card program," interim chief executive Jeffrey Hartmann, who took over for Kevin DeSanctis last month, said. "In groups, we saw 29 percent growth year-over-year for contracted room nights, and in the month of March, we hosted nearly 1,800 group room nights."

Eight casinos registered double-digit declines in revenue, the March numbers showed, including the four owned by Caesars Entertainment Inc.: Showboat (-24.3 percent); Caesars (-22.8 percent); Bally's (-18.8 percent), and Harrah's Resort (-13.8 percent).

For the first three months of 2013, the casinos generated $656 million, down 12.1 percent, from $746.2 million for the same period last year.

Lower gaming revenues were among the reasons cited last week by Moody's and Standard & Poor's in giving Atlantic City a negative outlook for 2013. Increasing competition from Pennsylvania, New York and other states, high local unemployment, and a still-recovering economy that is limiting customers' discretionary spending were other factors listed.

In a report Wednesday, gaming analyst Andrew Zarnett, of Deutsche Bank A.G., said, "For Atlantic City, our view of continued declines (apples-to-apples comparison excluding Sandy) into 2013 remains intact as consumers in this market (and everywhere else as well) will be negatively impacted by higher taxes (payroll, health care, and some cases Bush tax cuts), commodity costs (gas and other necessities), and the reduction to discretionary income."

Contact Suzette Parmley at 215-854-2855 or sparmley@phillynews.com.

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