N.J. casino revenues fell 10 pct. in January

ATLANTIC CITY - The 11 casinos here reported a 10 percent decrease in total revenue last month, with every gambling hall, even the formidable Borgata, showing a decline.

The casinos won $355 million at the slot machines and table games - compared to $394.5 million in January 2007.

But most notable were the revenue declines across the board. The casinos reported decreases that ranged from 21 percent at the Tropicana and Trump Marina, to 0.8 percent at Trump Plaza.

The figures released today from the New Jersey Casino Control Commission underscore the continuing impact of Pennsylvania and New York slots parlors, and last year's partial smoking ban on Atlantic City's casino floors.

By comparison, the half dozen slots parlors in Pennsylvania grossed $107.5 million in total slots revenue last month. The state does not allow dealer-staffed table games.

"A new factor that was introduced to the equation in January was a declining economy," said Deutsche Bank gambling analyst Andrew Zarnett, "so that coupled with the competition from Pennsylvania and the limited smoking, and a little bit worse weather than the prior year, has led to continuing decreases in gaming win."

Of the casinos' $355 million in revenue, slot machines made up $234.2 million of it, and table games, $120.8 million.

A critical factor was the continuing decline in slots revenue, which was down 13.9 percent - but still the lion's share of total gambling revenue in the seaside resort at 66 percent. Table game revenue, which made up 34 percent, decreased 1.5 percent.

Last month's numbers also come on the eve of the debut of Pennsylvania's seventh casino - Hollywood Casino at Penn National Racecourse in Grantville, just outside of Harrisburg.

The $310 million casino opens tomorrow and will add 2,000 slot machines to the Pennsylvania gaming market. Its clientele will likely include former bus riders to Atlantic City from that part of the state.

The impact of Pennsylvania slots on Atlantic City has been dramatic. Last year's total revenue for the 11 casinos here was $4.9 billion, down from $5.2 billion the previous year.

Likewise, the half dozen Pennsylvania slots parlors raked in $1 billion in total gambling revenue for 2007. Pennsylvania takes a 55 percent tax on gross slots revenue. That equates to $59.1 million from last month's $107 million gross slots revenue.

In New Jersey, the tax is 9.25 percent on gross gaming revenue - $32.8 million last month- which the state uses to benefit senior citizens and people with disabilities.

Larry Klatzkin, managing director of Jefferies & Co. in New York said, "Atlantic City is still trying to (overcome) the smoking ban and Pennsylvania opening up."

"But as far as Penn National's opening, I don't think it will have a big effect on Atlantic City," he said. "It's too far away."

Zarnett said the impact of the Pennsylvania slot parlors should mitigate in late spring.

"From there going forward, it will be easier for Atlantic City casinos, in terms of declining revenue, and that window remains open until Bethlehem opens in summer 2009," he said, referring to the $800 million casino that Las Vegas Sands Corp. plans to open as the next major casino in Pennsylvania.

The Borgata Hotel Casino & Spa remains Atlantic City's top grossing casino. It took in $60.9 million last month, a 3.9 percent decrease from the previous year. It was followed by Bally's at $45.2 million - down 7.5 percent - and Caesars at $40.3 million - down 9.1 percent. Both casinos are owned by Harrah's Entertainment Inc. of Las Vegas, which was acquired by two private equity firms last month.

At the Tropicana, which shared the steepest revenue decline last month at 21 percent with Trump Marina, state-appointed trustee Gary Stein announced last Thursday that bidding for the Boardwalk casino begins next Monday. The New Jersey Casino Control Commission stripped former Tropicana owner, Columbia-Sussex Corp., of its operating license in mid-December for regulatory violations and massive layoffs that led to unsanitary conditions and a loss of business at the casino.