Atlantic City improves but still long shot to recover

Only in Atlantic City would casino operators be celebrating a less than 1 percent decline in monthly gaming revenues.

April's casino win of $311.5 million didn't reverse a downward spiral that goes back to August 2008, but it gave casino operators on the Boardwalk some hope.

"Not only do we want to position Atlantic City as a sought-after shore destination rich in entertainment offerings for all ages, but one that is financially accessible," Harrah's Entertainment's Eastern Division President Don Marrandino told the Press of Atlantic City last week.

Harrah's operates four of the market's 11 casinos.

The decline was Atlantic City's smallest since the nosedive began. In six of the past 12 months, gaming revenues have taken double-digit drops, including 16.3 percent in August and 15.7 percent in February.

But the celebration over April may be short-lived.

The market is bracing for increased gaming competition in Pennsylvania and Delaware, where slot machine-only casinos are adding table games. New York continues to flirt with placing slot machines at the Aqueduct Racetrack.

MGM Mirage and Pinnacle Entertainment have announced they are abandoning the market.

Last month, Revel Entertainment Group lost its largest investor and the company's under-construction $2 billion, 2,000-room hotel-casino project is in danger of collapsing. Atlantic City leaders are trying to help salvage the development.

Wall Street basically wrote off April.

"Atlantic City gaming revenues will trend down as the competitive landscape is expected to intensify," Deutsche Bank gaming analyst Andrew Zarnett said.

He said Borgata, the market's leading casino, which is operated by Boyd Gaming Corp., could see revenues plummet when a casino opens in Philadelphia late this year.

Wells Fargo Securities gaming analyst Dennis Farrell Jr. echoed those sentiments.

"Despite improving sequential declines, we remain concerned that increasing region supply is too large to ignore and will likely offset regional macro-economic improvements," Farrell said. "We believe pressure on Atlantic City gaming venues will intensify."

New Jersey lawmakers are feeling the heat and have floated various gaming reform ideas to keep customers within the state.

Proposals include allowing sports wagering inside Atlantic City's casinos and smaller boutique-style hotel-casinos along the Boardwalk. Another plan calls for New Jersey's racetracks to offer slot machines.

Consensus among operators, however, will be the key to survival.

Howard Stutz's Inside Gaming column appears Sundays. He can be reached at hstutz@reviewjournal.com or 702-477-3871. He blogs at lvrj.com/blogs/stutz.