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Gaming Guru

Joe Weinert
 

Atlantic City Round-Up

21 January 2003

The administration of New Jersey Gov. Jim McGreevey has abandoned attempts to bolster the state budget by adding video lottery terminals to state racetracks, officials said.

McGreevey, facing a $5 billion revenue shortfall, was exploring a way to install the slot-like gambling machines without going through the lengthy process of changing the state constitution, which allows casino-style gambling only in Atlantic City.

The Casino Association of New Jersey, which represents the 11 Atlantic City casinos, was fighting such attempts.

"Atlantic City is very happy about it and all of the casinos are very happy about it," said Donald Trump, chairman and chief executive of Trump Hotels & Casino Resorts, which owns three Atlantic City casinos. "I think he's going to go down as a great governor. I think he's going to be very, very supportive of Atlantic City and I have tremendous confidence in him."

A state senator, however, reintroduced his own bill calling for 3,000 VLTs at the Meadowlands, Monmouth Park and Freehold racetracks. "It would be devastating for Atlantic City if that were to happen," Trump said.

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The New Jersey Division of Gaming Enforcement will not oppose a $475 million bond sale by Donald Trump's casino company, clearing the way for a crucial refinancing this year.

Attorney General David Samson, who oversees the DGE, had said he might oppose the bond sale, concerned that the Trump casinos were overleveraged and not expanding like their competitors in Atlantic City.

DGE Director Tom Auriemma said the bond sale will help Trump Hotels & Casino Resorts by extending its debt maturities until 2011 and 2012 and possibly reducing the company's interest costs.

"We do, however, call for a plan to be submitted by the (license) renewal dates this spring ... for a comprehensive plan to deal with the debt of these three casinos and also to outline what additional amenities they would be adding to their properties," Auriemma said.

Trump Hotels has $1.9 billion in debt, mostly high-interest junk bonds that leave its casinos little cash left over for improvements and expansion.

The Casino Control Commission will consider the bond sale at a special hearing on Wednesday. Also this week, Trump Hotels plans to start a road show to sell investors on the deal.

The company wants to sell $475 million in bonds to refinance debt supported by the Trump Marina and Trump Indiana casinos. Some $312 million of the existing debt comes due in November.

Trump Hotels prepared for the road show by reporting early results for the two relevant casinos. Together, they reported full-year cash flow of $97.6 million, up 25 percent, on revenue of $394.3 million, up 6 percent. For the fourth quarter, their cash flow grew 5 percent, to $20.7 million, on revenue of $91.4 million, down 0.3 percent.

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Slot machines accounted for 74.4 percent of the Atlantic City casino revenue last year, the 22nd straight year in which slots have taken an increasingly bigger piece of the revenue pie.

For only the fourth time in the last 24 years, the city's slots were tighter than the year before. They paid out 91.94 percent compared to 91.97 percent the year before. Officials said the rise in nickel slots, which have a higher-hold, contributed to the slight decrease in payouts.

Other results gleaned from the official year-end results released by the Casino Control Commission:

* Casinos won $4.38 billion from gamblers, up 1.8 percent. The Atlantic City casino industry has never experienced negative annual revenue growth in its 24-plus years.

* Slot-machine revenue increased 3.8 percent while table-games revenue declined 3.6 percent.

* Harrah's led the city in revenue growth at 9.2 percent. Sands led the city in revenue decline at 11.4 percent.

* As it has been since it opened in 1990, Trump Taj Mahal was the revenue leader at $536 million.

* The growth in citywide gambling revenue trailed the national inflation rate (2.4 percent last year) for the third straight year.

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Today's president of Sands Casino Hotel is ... Tom Davis.

Sands is starting the new year with its fourth president in 13 months, hiring Davis to replace Tim Ebling, who was on the job only three months. Ebling, a 19-year Sands veteran, was returned to his former role as chief financial officer.

"The addition of Tom Davis will strengthen the property's operating capabilities and Tim Ebling's transition to a financial role further enhances the property's overall ability to compete," Richard Brown, Sands' Las Vegas-based chief executive, said in a prepared statement.

Brown, who also oversees the other Carl Icahn casinos -- Stratosphere and the Arizona Charlie's -- did not return calls for further comment.

Davis has been an executive at numerous casinos, including a stint as general manager of the Pioneer in Laughlin, Nev.

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There's a new king in the casino world.

The Mohegan Sun in Uncasville, Conn., surpassed nearby rival Foxwoods Resort Casino in slot revenue for the first time last month. It won $62.1 million, up 6 percent over the same month last year, while Foxwoods won $54.5 million, down 9 percent.

Foxwoods had 1,712 slots out of service for a renovation while Mohegan continues to get big returns from its $1.1 billion expansion.

For the year, the two casinos had slot revenue of $1.5 billion, up 8.5 percent. They do not publicly report their table-games revenue.

(Joe Weinert covers the gaming industry for The Press of Atlantic City. He can be reached at jweinert@pressofac.com.)