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Gaming Guru

Joe Weinert
 

Atlantic City Round-Up

6 January 2003

ATLANTIC CITY -- In what analysts expect to be a harbinger for gaming markets across the country this month, Atlantic City casinos reported a 9.7 percent decline in December gambling revenue.

The city's dozen casinos won $314.2 million from gamblers last month, or $33.6 million less than during the same period a year earlier, according to preliminary results. The casinos faced a difficult comparison to the record-setting December of 2001, when the nation seemed to break out of its 9-11 funk and cut loose for some fun.

"Clearly the comparison to the year-ago month was a difficult one," said Robert Stewart, spokesman for Park Place Entertainment, which owns three Atlantic City casinos. "One, because a year ago you had some very favorable weather conditions, you had an extra Saturday and the feeling a year ago that, by the time December rolled around three months after the tragic events of Sept. 11, people were very anxious to go out and resume normal lives. For that reason, December of '01 was exceptionally strong."

It didn't help casinos last month that gamblers were a bit luckier than usual at the gaming tables. The casinos kept 15 percent of the bets compared to 15.8 percent a year earlier.

Only one casino, Harrah's Atlantic City, reported a revenue gain during the month. Still getting big returns from its $200 million hotel and casino expansion earlier in the year, revenue at Harrahs's increased 11.8 percent to $34.8 million.

Atlantic City casinos finished the year with gaming revenue of $4.4 billion, up 1.9 percent.

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Atlantic City now has one less casino.

The Claridge Casino Hotel on Dec. 30 officially became another wing of Bally's Atlantic City, the result of a merger announced last summer. Park Place Entertainment had bought the Claridge 19 months earlier in a bankruptcy sale and last summer had physically connected it to Bally's.

Bally's becomes the city's largest casino hotel by any physical or financial measure. The combined Bally's-Claridge gambling revenue last year was $688.8 million.

Atlantic City now has 11 casino hotels for the first time almost 13 years.

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Donald Trump, his back against the financial wall, is preparing a second attempt to sell a $470 million bond deal to retire various casino-company debts, including a $312 million chunk that's due in 10 months.

A subsidiary of Trump Hotels & Casino Resorts asked the New Jersey Casino Control Commission to approve the deal, which the company plans to begin shopping as early as next week.

Trump canceled a similar sale last spring, saying investors demanded interest rates higher than he was willing to pay. He's banking on a series of four straight quarters of big earnings improvements to convince investors that he deserves a lower rate.

"Before we were just talking about the results. Now we're showing the results. They're even better than I projected. We're a wonderful cash flow company," Trump said.

Deutsche Bank Securities and Credit Suisse First Boston are comanaging the sale with help from four other investment banks, Trump said.

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Carl Icahn's Sands Casino Hotel announced another round of job cuts, this one affecting between 100 and 150 employees.

The casino finished the year with an 11.6 percent decline in gambling revenue, including a 26 percent decline in September.

"We believe that it is necessary to reduce our expenses at this time in view of our results of operations in the year 2002 and anticipated competitive challenges in 2003," said Timothy Ebling, who was promoted to Sands president three months ago.

Sands cut 266 jobs last spring after it discarded most of its gaming tables in favor of 400 more slot machines.

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Two Harrah's Entertainment casinos had to remove 109 expiring slot machines from duty because they said they were unable to replace or upgrade them despite a year's notice from gaming regulators.

New Jersey regulations require casinos to replace, upgrade or retest slot machines by the Jan. 2 after the 12th anniversary of their last testing. The Division of Gaming Enforcement told Harrah's Atlantic City and Showboat a year ago that 55 and 64 of its slots, respectively, needed attention.

Showboat said its internal approval process was somehow delayed and that it could replace only 10 machines by the Jan. 2 deadline. Harrah's Atlantic City said International Game Technology was unable to deliver on time the necessary change-model kits it had ordered.

Harrah's Entertainment pleaded unsuccessfully with the Casino Control Commission for an extension. "They had a year," agency Chair Linda Kassekert said.

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Mark Juliano, the former Caesars Atlantic City president who later worked for MGM Mirage, is now chairman of Titan Cruise Lines. The Florida-based company plans to operate gambling cruises out of St. Petersburg. Juliano said he will have no role in the company's daily operations.