For the last 18 months, Atlantic City casino operators have cited Pennsylvania’s slots parlors as a significant drag on their operations.
They’ve also been preparing for years to battle that competition by adding new hotels, nightclubs and shopping. So far, the odds haven’t tilted in Atlantic City’s favor.
The New Jersey Casino Control Commission provides monthly data on revenues at the 11 casinos. Each month, they seem to be down asa much as 10 percent year over year.
But it’s not only the top line that’s shrinking. For the fifth straight quarter, Atlantic City’s casinos reported lower gross operating profit, the commission said Monday.
Collectively, the casinos produced operating profit of $243.8 million in the first three months, down 17.7 percent from the same period of 2007.
Only Harrah’s Marina and Trump Plaza had increases in gross operating profit, which is earnings before interest, taxes and other item.
As for the bottom line, it was the second quarter that the casino industry posted a net loss. It lost a total $32.6 million in the first quarter, after losing $230.3 million in the fourth quarter.
I was skeptical of the projections made by Pennsylvania’s prospective gambling license seekers. But there’s no ignoring this: Only half of the maximum 14 slots parlors are open, and the industry is on pace to generate $1.5 billion in revenue in only its second year compared with the $5 billion Atlantic City rakes in.
Perhaps we’ll see some shift in gamblers’ preferences this summer.
Even though casinos are open all year long, the summertime remains Atlantic City’s biggest season when the gambling industry generates its biggest quarterly profits.
Can it bounce back at a time when gas prices are nipping $4 a gallon? Or will Pennsylvania gamblers be content to feed their hundreds of millions of dollars into the slots close to home?
Between Memorial Day and Labor Day, Atlantic City’s casino operators are going to learn a lot about whether they’ll start seeing a return on the billions of dollars they’ve invested over the last few years.