Saturday, July 12, 2008

Atlantic City Gaming Revenue Falls 11% In June

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Atlantic City's 11 casinos reported an 11% decline in gaming revenues in June, compared to the same month last year. Slot revenue fell 12.2% while table game revenue fell by 8%.

Andrew Zarnett, gaming analyst with Deutsche Bank AG, "Ugly, that's the only way to put it. The American consumer is getting hit hard by higher energy prices, by higher food prices, and is being affected by overall uncertainty in the economy. "Discretionary dollars are significantly less," he said, "and gaming is feeling the impact. It's really bad."

Atlantic City's casino revenues are also being hampered by seven slot parlors in neighboring Pennsylvania that have all opened in the span of less than two years, beginning with the Mohegan's slot parlor in November 2006. Two Pennsylvania slot parlors have opened since June 2007, adding 4,600 slot machines between them and bringing the state's total to 15,401 slot machines in operation.

The $310 million Penn National Hollywood Racetrack opened in February on land Penn National has owned since the 1970's and is near Harrisurg, Pa. The $412 million Mount Airy slot parlor opened in November and has a 188-room hotel. Mount Airy is located in the Pocono Mountains, about 20 miles from the Mohegan's Pocono Downs racetrack-slot parlor. The Mount Airy Lodge was purchased in 2005 for $25.1 million.

Zarnett said the worst may yet come when New Jersey's casino smoking ban takes effect Oct. 15.

Las Vegas casinos also saw their revenues drop recently, accord to the latest figures. Las Vegas' casino revenue fell by 16.4% in May.

The latest revenue figures reported by Mohegan and Mashantucket are for the month of May and include only slot machine revenues for that month. Foxwoods slot revenues increased by 7.7%, in large part due to its opening of the MGM Grand at Foxwoods casino expansion in the middle of May. The amount wagered at Mohegan's Sun's slot machines fell in May but the casino kept a larger portion of the slot machine bets, resulting in a slot revenue increase of less than one percent over the same month last year.

June slot revenue figures for Mohegan Sun and Foxwoods are expected to be announced next week.