Casino profits slide 25 percent in Atlantic City

By Amanda Finnegan

Friday, May 21, 2010 | 2:41 p.m.

Severe winter weather, regional competition and an overall decline in consumer spending delivered a big blow to Atlantic City casinos during the first quarter of the year.

Atlantic City’s 11 casinos reported a 25.2 percent drop in profit in the first three months of 2010, according to a report this week by the New Jersey Casino Control Commission.

Gross operating profits at Atlantic City casinos totaled $111.2 million for the three-month period, compared to $148.7 million for the same period last year. Net revenue fell by 8 percent for the first quarter.

The Borgata, which is 50 percent owned by Boyd Gaming, led Atlantic City casinos with gross operating profit of $39.4 million for the quarter, which is a 16 percent decline in the year-over-year period.

Las Vegas-based Harrah’s Entertainment, which owns more than 6,800 hotel rooms at four properties in Atlantic City, reported gross operating profit in New Jersey of $72.5 million during the first quarter of 2010, down from $90.3 million in the same three months the previous year.

Under new ownership, the Tropicana was the only casino to report an increase in gross operating profit for the quarter with $5.1 million, an increase of 6.2 percent. Billionaire Carl Icahn bought the casino out of bankruptcy in June 2009.

One highlight for Atlantic City resorts during the quarter was an increase in room occupancy. Occupancy increased from 75.3 percent in the first quarter of 2009 to 76.9 percent during the first quarter of 2010. The average daily room rate at the city's 11 hotel-casinos was $95.26, up from $93 a year ago.

On top of the sluggish economy, Atlantic City saw record snowfall this winter, hindering travel to resorts. The winter months are typically slower for the beachfront casinos.

The Atlantic City market has seen an increase in competition in recent years from gaming operations in neighboring states like New York, Pennsylvania and Delaware. According to an American Gaming Association report earlier this month, New Jersey saw a 13.3 percent drop in consumer spending in 2009, the largest decline of the 13 commercial casino states. Pennsylvania saw the biggest increase, at 21.6 percent.

New Jersey casinos will see even more competition this summer when Las Vegas Sands’ Pennsylvania casino adds table games.

New Jersey is the nation’s second-largest gaming market, after Nevada. Consumer spending at commercial casinos in New Jersey totaled $3.9 billion in 2009, while Nevada recorded $10.4 billion.