It can’t get any worse for Atlantic City.
Last week’s news that November gaming revenues at Atlantic City’s 12 casinos suffered their worst single-month decline in the New Jersey community’s 34-year history of legalized gaming had to be the low point.
Or was it?
Granted, Superstorm Sandy, which hit the region in late October, caused most of Atlantic City’s casinos to stay closed between Oct. 28 and Nov. 5.
Infrastructure impairments hindered travel from key feeder markets while residents of the Atlantic City – many of whom are employed in the casinos – were dealing with their own property damages.
In November, casino revenues fell 27.9 percent, which followed a 19.9 percent drop in October.
Not all the declines can be attributed to the storm.
Atlantic City’s gaming revenues have been subject to an onslaught over the past few years as the market’s monopoly on Northeast gaming has shrunk.
Casino growth in Pennsylvania and other neighboring states have taken away business. Gaming expansion is continuing up the Eastern seaboard.
Between 2006 and 2011, Atlantic City’s gaming revenues declined 38 percent.
Since 2010, the area experienced just two monthly gaming revenue increases, including a 12.6 percent jump in August.
Any gains, however, were washed away by Sandy. For the first 11 months of 2012, gaming revenues are down 8 percent.
“The aftermath of the hurricane will likely have a lingering effect,” said Wells Fargo Securities gaming analyst Dennis Farrell Jr. “As the recovery continues to be under way, it is likely premature to estimate what the drag on results will be in the coming months.”
Atlantic City still faces stormy weather.
For example, a second casino is being planned for Philadelphia, which is just an hour’s drive away.
The $2.4 billion Revel opened on the Boardwalk in April but hasn’t been the savior that many Atlantic City observers hoped.
In November, Revel produced just $6.2 million in gaming revenue, second to last in Atlantic City. Only the Trump Plaza had a worse month.
In addition, Revel’s operators warned in Securities and Exchange Commission filings the property could face bankruptcy or foreclosure because of its $1.3 billion debt.
Revel Chief Executive Officer Kevin DeSanctis said in a statement he has confidence in the casino’s marketing strategy and business that canceled because of the storm would return.
Farrell warned any boost in Revel’s numbers could be at the detriment to its competition.
“Existing operators could see further revenue cannibalization and margin compression, especially on the Atlantic City Boardwalk,” Farrell said.
There are a few glimmers of hope.
Caesars Entertainment Corp. operates four of Atlantic City’s casinos and company executives have publicly stated their support for the market.
Much of the optimism stems from gaming reforms offered by New Jersey Gov. Chris Christie, although the changes have been slow to arrive.
Caesars recently signed a deal with Republic Airways that will bring roughly 30,000 to 35,000 visitors a year on charter flights to Atlantic City.
The newest white knight, however, might be a controversial online gaming giant.
PokerStars, which was kicked out of the U.S. by federal prosecutors 20 months ago, is reportedly interested in buying the struggling Atlantic Club on the Boardwalk.
The Wall Street Journal reported Dec. 6 that PokerStars, based in the British dependency Isle of Man, was negotiating to purchase the property from private equity group Colony Capital for less than $50 million.
The deal is contingent on New Jersey legalizing online gaming.
A bill is currently under debate in the legislature, which would allow gamblers to wager on the websites – operated by Atlantic City casinos – from within New Jersey’s borders.
PokerStars agreed in August to pay $731 million to the federal government to settle a nine-count criminal indictment.
The company and its founders were accused in April 2011 of bank fraud, money laundering and running an illegal gaming business.
In the settlement, PokerStars did not admit to any wrongdoing.
The company is also not prohibited from re-entering the U.S. gambling market in legal ways. But it was required to change senior management.
A deal with PokerStars to save the Atlantic Club, which was originally built by Steve Wynn in the 1980s as the Golden Nugget and most recently operated as the Atlantic City Hilton, may give members of the New Jersey Casino Control Commission heartburn.
The state has an ultrastrict gaming regulatory reputation.
The Division of Gaming Enforcement all but kicked MGM Resorts International out of Atlantic City in 2010 when it decided Hong Kong businesswoman Pansy Ho, the company’s joint venture partner in Macau, was unsuitable.
The ruling was primarily due to her father, controversial billionaire Stanley Ho, whose Macau casinos are alleged by international law enforcement to be under the influence of Chinese organized crime triads.
Pansy Ho has never been accused of wrongdoing, nor has she ever paid a multimillion dollar fine to settle a government indictment.
Her business ties with MGM Resorts were deemed suitable by gaming regulators in Nevada and Mississippi.
Would New Jersey gaming regulators change course and license PokerStars in order to save the Boardwalk?
It depends whether or not the Atlantic City gaming market has bottomed out.
Howard Stutz’s Inside Gaming column appears Sundays. He can be reached at email@example.com or 702-477-3871. He blogs at lvrj.com/blogs/stutz. Follow @howardstutz on Twitter.