ATLANTIC CITY - As Pennsylvania's gambling market expands, analysts say Atlantic City's casinos haven't hit bottom yet.
Figures released yesterday underscored their point: Last month's revenue at Atlantic City's 11 casinos plunged 14.2 percent from April last year. Meanwhile, April revenue at Pennsylvania's seven slots parlors rose 13.8 percent - to $150.7 million - from the year before.
The April decrease in Atlantic City - to $313.6 million - was an improvement from the revenue declines of 19.4 percent in March and 19.2 percent in February. But it's what's in store later this month that has casino operators here anxious.
Atlantic City will soon face a formidable competitor: the $743 million Sands Bethlehem Casino in the Lehigh Valley, which will open May 22 with 3,000 slot machines. By mid-November, the massive casino will ramp up to 5,000 slots.
Las Vegas Sands Corp., which also owns casino hotels on the Las Vegas Strip and in Macao, South China, scaled back the original $1 billion-plus Bethlehem project because of the nationwide credit crisis and recession. A hotel, a retail mall, and some restaurants are on hold until economic conditions improve, Sands Bethlehem Casino president Robert DeSalvio said.
Still, Sands Bethlehem is expected to siphon New York and North Jersey customers, who can travel I-78 directly to the casino. Such customers now make up about 45 percent of Atlantic City's clientele.
While Las Vegas Strip gambling revenue, like Atlantic City's, has suffered a double-digit decrease this year, Las Vegas Sands chairman and chief executive officer Sheldon Adelson said he remained bullish on Pennsylvania.
"I think the Pennsylvania market will only continue to grow," he said, "and it will cannibalize Atlantic City."
For the first four months this year, the casinos in Atlantic City took in $1.3 billion, down 15.7 percent from the same period last year. Revenue from slot machines was down 16.5 percent, and revenue from table games was down 14 percent.
Five of the 11 casinos are fighting for survival. The three Trump casinos are in Chapter 11 bankruptcy. Bidding for the Tropicana in a bankruptcy auction starts this month, and Resorts is negotiating with its lenders to avoid foreclosure.
"While we remain cautiously optimistic about Atlantic City in the long run, given a low tax-rate environment and still-enormous population demographics, we believe the market will continue to face some challenges as the economic shakeout occurs," Joel Simkins of Macquarie Capital(USA) Inc. said in a recent investor note. "In our view, there is a distinct possibility that one to three casinos could be permanently closed in the next few years."
All 11 casinos here had April revenue decreases, ranging from 0.3 percent at the Borgata to 27.9 percent at Trump Marina.
By comparison, six of the seven Pennsylvania casinos reported increases. Harrah's Chester Casino & Racetrack was down about 2.5 percent. PhiladelphiaPark Casino & Racetrack led again with $31.1 million in gross slots revenue last month.
For Atlantic City, the only silver lining is the arrival of its peak season, from Memorial Day weekend through Labor Day, when it heavily markets the one asset Pennsylvania can't match - the beach.