For the fourth time in five recorded months this year gaming revenues failed to surpass the previous years. Now it looks as if 2007 will be the first year since gaming was legalized in 1978 that the city’s casinos will collectively fail to earn more than the previous year.
Figures released this week by the New Jersey Casino Control Commission report that in May 2005, casinos reported $408.8 million in casino win, a 5.5 percent drop compared to the same month a year ago. The Commission said that the city’s 11 casinos won $294.0 million at the slot machines and another $114.8 million at table games in May. Slot revenue decreased by seven percent while table revenues decreased by 1.4 percent.
For the first five months of the year, casinos won $2.0 billion, down 4.4 percent from the $2.1 billion won in the same period last year. Slot revenue for the five-month period was down 6.9 percent and table revenue was up 2.2 percent.
It looks as if several factors are conspiring against the market, which has the danger to affect its future ability to grow and mature. Currently several new casino resorts are in the planning stages, and while their viability has not yet been called into question the pressure is certainly on for this market to once again start performing.
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The problem here is the development of casinos in nearby Pennsylvania, which also has the West Virginia market in upheaval (as has been widely reported by onlinecasinocrawler.com). With the City by the Sea’s core clientele—who typically come from places like Philadelphia via bus – staying closer to home to try their luck, as well as stricter no smoking rules on the casino floor, these factors are starting to chip away at the market’s profitability. Slot machines are also now available in Atlantic City’s other major feeder market; New York. One armed bandits are now located just outside New York City at several raceways.
"We're continuing to see the impact on our slots business as a result of slots in Pennsylvania and in New York," said Tony Rodio, president of the Atlantic City Hilton and Resorts casinos to the AP. Those casinos were down 8.0 percent and 0.5 percent, respectively, in revenue from slots last month. "In addition, it's clear since the institution of the partial smoking ban, we are seeing a further erosion of our slots revenue."
The big winner in the market was the Borgata, which since it opened in July 2003 has been the most successful casino in Atlantic City. In May, revenues we up a beefy 8.0 percent while table revenue was up 11.0 percent and slot take was up 3.8 percent.
As a group, Trump Entertainment’s properties continued to see revenues crash. Together, Trump Taj Mahal, Trump Marina and Trump Plaza saw year over year May revenue declines of 7.0 percent. The Marina was down 8.7 percent alone. The company’s long term viability has been in doubt for sometime and this represents another misstep for the company. Its likely Trump will be sold in the coming months and its likely the Plaza and/ or Maria would be razed and replaced by modern multi-billion mega resorts.
Casinos paid $32.7 million in taxes on their gross revenues in May. That money, eight percent of gross revenue, goes into the Casino Revenue Fund which pays for programs that benefit qualifying senior citizens and people with disabilities. In addition, the casinos incurred another $5.1 million in reinvestment obligations. They are required to reinvest 1.25 percent of gross revenues in projects approved by the Casino Reinvestment Development Authority.
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