A.C. casinos' June revenues down 12.6%

Swimmers and sunbathers have enjoyed the beach at Atlantic City recently, but casinos have not been so lucky.
Swimmers and sunbathers have enjoyed the beach at Atlantic City recently, but casinos have not been so lucky. (DAVID M WARREN / Staff Photographer)
Posted: July 12, 2013

ATLANTIC CITY - June revenue for the dozen casinos here declined 12.6 percent from a year ago to $274.7 million - a less-than-stellar start for what operators had hoped would be a bang-up summer after Hurricane Sandy and all its negative publicity for the Shore.

After a very rainy June that had one fewer Friday than June 2012 did, numbers released Wednesday by the New Jersey Division of Gaming Enforcement showed that all the casinos posted revenue declines, ranging from 0.5 percent at Resorts to 23.6 percent at Trump Plaza.

"Atlantic City continued the theme of ugly June gaming revenue numbers," RBC Capital Markets L.L.C. gaming analyst John Kempf wrote in an investor note Wednesday.

Revel, fresh from bankruptcy, was especially hoping for a strong month but took 10th place in June, as it had in May. The struggling casino, which opened in early April 2012, generated $11.6 million from slot machines and table games, a 22.6 percent year-over-year decrease.

The bottom-tier finish again for Revel came after it rolled out smoking lounges, a beach bar, and a new restaurant after Memorial Day in an effort to expand its customer base. On July 1, it started an aggressive slots promotion to refund players' losses over $100 for the month. Slots revenue at Revel was down 22 percent in June compared with a year ago.

Market leader Borgata had an 8.9 percent decrease from June 2012, generating $48.6 million.

Tiny Atlantic Club, which is still looking for a buyer, reported a 4.8 percent decline, the second lowest among the casinos, taking in $13 million.

"We are extremely pleased with June's performance," said Atlantic Club's chief operating officer, Michael Frawley. The casino "continues to significantly outperform the Atlantic City market and our prior-year profitability numbers."

For the first six months of the year, the Shore's casinos generated $1.38 billion in revenue, down 10.7 percent from the same period a year ago.

Blame for Atlantic City's steadily declining revenues has been heaped on new casinos in Pennsylvania, which had been a key feeder market for decades prior to 2006.

But even Pennsylvania is starting to feel the heat of competition. That state reported its first year-over-year decrease in gross slots revenue in June - down nearly 2.0 percent, from $2.48 billion to $2.43 billion.

"A leveling of revenue, and even a slight drop, is not surprising since no new Pennsylvania casinos opened in the past 15 months and opportunities have materialized for gamblers to play in bordering states like Ohio and Maryland, which now have casinos," said Pennsylvania Gaming Control Board spokesman Doug Harbach.

The pressure is nothing new for Atlantic City.

"Our view of continued declines into 2013 remains intact, as consumers in this market will be negatively impacted by higher taxes and commodity costs," said analyst Andrew Zarnett of Deutsche Bank.

"Further," Zarnett said, "we expect gaming revenues to be negatively impacted by incremental competition from the table games at Maryland."

Contact Suzette Parmley at 215-854-2855, sparmley@phillynews.com or @SuzParmley on Twitter.

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