In Atlantic City, A Silver Lining For Casinos Left Standing
New casinos are popping up all along the East Coast, giving Atlantic City a run for its money. Four casinos out of 12 in Atlantic City closed last year. But those closures have, in turn, helped the remaining gambling houses there.
Casino customers tend to be pretty loyal to one or two houses — to accrue rewards, or sometimes for other reasons.
"We like to bring the dog down once in a while because he likes to walk the boardwalk, go in the ocean," says Patty Davis. She and her husband travel more than six hours to gamble in Atlantic City.
The Davises used to go to the Showboat casino because its hotel allowed dogs. When it closed in September, the couple and their Pomeranian started going to Harrah's, because it allows dogs.
Many people have been taking their business to other casinos in the city since their usual haunts closed, which has meant better business for the places left standing.
Resorts, Atlantic City's oldest casino, still lost money in the first quarter of this year but a lot less than it did last year.
"We're certainly seeing the benefit of a smaller competitor base, so our revenues and our profitability continue to improve steadily," says Mark Giannantonio, president and CEO of Resorts.
In other words, Atlantic City went from having 25,000 slot machines at the start of last year to 17,000 now. It went from 12 underperforming casinos to eight fuller gambling houses. And that has helped the remaining casinos grow their profits by 26 percent.
It certainly looked like the first good news for Atlantic City in a long time. But Moody's Investors Service analyst Keith Foley says it doesn't mean the rest of the casinos are in the clear.
"In addition to the fact that you've got larger and more competitors within that region, you've got a couple of trends going on in regional gaming that will affect Atlantic City and probably not positively," Foley says.
Casinos need to replace their aging customers. But, Foley says, younger people not only have less disposable income, they're also just less interested in playing the slot machines.
Joe Lupo is senior vice president at the Borgata, where profits were up 82 percent for the first quarter of this year. He says the most important thing for Atlantic City's remaining casinos is to take their new profits and reinvest them in their properties.
"Product's extremely important, especially when you have a similar gaming product in your backyard in Pennsylvania, New York and Maryland, what's the differentiator?" Lupo says.
While Lupo says the casino industry in Atlantic City has stabilized, the region is still reeling from the closures. The county has an unemployment rate that is twice the national average and leads the state in foreclosures.
Back at Resorts, a lounge beside the blackjack tables shows off one of the casinos' biggest hopes for growth: its website for online gambling. However customers who log in from home will be able to pour their own gin and tonics. So even great success on the Internet won't bring back many of the lost jobs.
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Transcript
ROBERT SIEGEL, HOST:
The first quarter of this year brought some unusual news for Atlantic City's casinos. Unusual because the news is positive - profits are up. This is after one casino after another closed last year. Four out of a total of 12 shut their doors. Well, it turns out the reduced competition has benefited the casinos left standing. But as Emma Jacobs reports, there are still plenty of challenges ahead.
EMMA JACOBS, BYLINE: Casino customers tend to be pretty loyal to one or two houses to accrue rewards or sometimes for other reasons.
PATTY DAVIS: We like to bring the dog down once in a while 'cause he likes to, you know, walk the boardwalk, go in the ocean.
JACOBS: Patty Davis and her husband used to go to the Showboat casino because its hotel allowed dogs. When it closed in September, the Davis's and their Pomeranian - who they call President Clinton -didn't know where they would go next.
DAVIS: And so then we found out that Harrah's would allow dogs, so now we go to Harrah's. Here, Clinton. Here, Clinton.
JACOBS: If they just wanted to gamble and not the boardwalk getaway, the Davis's could find a replacement that's not six hours from home. A big reason for the closures here is that new casinos have opened up and down the East Coast. But after the casinos closed, at least some of the patrons, like Davis and her husband, are checking out new ones in Atlantic City. Mark Giannantonio is president and CEO of Resorts, Atlantic City's oldest casino. Resorts still lost money in the first quarter of this yea, but a lot less than it did last year.
MARK GIANNANTONIO: We're certainly seeing the benefit of a smaller, you know, competitor base, so our revenues and our profitability continue to improve steadily.
JACOBS: In other words, Atlantic City went from having 25,000 slot machines at the start of last year to 17,000 now. It went from 12 underperforming casinos to eight fuller gambling houses. And that's helped the remaining casinos grow their profits by 26 percent. It certainly looked like the first good news for Atlantic City in a long time, but Moody's Investors Service analyst Keith Foley says it doesn't mean the rest of the casinos are in the clear.
KEITH FOLEY: In addition to the fact that you've got larger and more competitors within that region, you've got a couple of trends going on in regional gaming that will affect Atlantic City and probably not positively.
JACOBS: Casinos need to replace their aging customers, but Foley says younger people not only have less disposable income, they're also just less interested in playing the slot machines. Joe Lupo is senior vice president at the Borgata, where profits were up 82 percent for the first quarter of this year. He says the most important thing for Atlantic City's remaining casinos is to take their new profits and reinvest them in their properties.
JOE LUPO: Product's extremely important, especially when you have a similar gaming product in your backyard in Pennsylvania, New York and Maryland. You know, what's the differentiator?
JACOBS: While Lupo believes the casino industry in Atlantic City is stabilized, the region is still reeling from the closures. The county has an unemployment rate that is twice the national average and leads the state in foreclosures.
Back at Resorts, a lounge beside the blackjack tables shows off one of the casino's biggest hopes for growth - its website for online gambling. However, customers who log in from home will be able to pour their own gin and tonics, so even great success on the Internet won't bring back many of the lost jobs. For NPR News, I'm Emma Jacobs in Atlantic City. Transcript provided by NPR, Copyright NPR.
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