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Gaming Guru

Joe Weinert
 

Atlantic City Round Up

28 October 2003

ATLANTIC CITY -- Paul Rubeli made it his business to get involved in other casinos' business in typically passionate remarks made during Aztar Corp.'s third-quarter conference call.

Rubeli, Aztar's chairman and CEO, came to the defense Borgata Hotel Casino & Spa's early performance and criticized a Harrah's Atlantic City executive for potentially sparking a market-share war.

Borgata, Rubeli pointed out, helped boost citywide slot and table revenue by 5 percent in its first three months of operation. The $1.1 billion casino quickly became the No. 1 casino in table revenue and won more than its fair share of business at the slots.

"This stuff about somehow or another they're not performing in a manner consistent with expectations with growth in the city and, 'What does this portend for the future?' I don't understand," Rubeli said.

Aztar's Tropicana in Atlantic City reported third-quarter declines of 8 percent in cash flow and 9 percent in revenue due chiefly to the opening of Borgata. Despite the setback, Rubeli pleaded with casino bosses to refrain from boosting cash incentives to recoup business lost to Borgata.

By name, Rubeli accused Dave Jonas, Harrah's senior vice president of Atlantic City operations, of 'flinching' by doubling the cash-back rewards to premium gamblers. Rubeli even read aloud a marketing letter Jonas wrote to customers.

Jonas called Rubeli's remarks "irresponsible."

"Paul Rubeli does not have any clue what our reinvestment is and what programs we shaved to pay for this," he said. "He must have a lot more patient shareholders than we do who expect a return from Atlantic City. My job is to make sure those returns happen."

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Borgata surpassed analystsí expectations in its first three months of operations by reporting cash flow of $30.5 million on net revenue of $150 million.

Borgata's revenue was second in the city only to Ballyís $183 million. Bally's merged with the neighboring Claridge at the end of last year.

"Now that they have the combined properties they'll probably always be No. 1 and hard to catch. Had they been separate, we probably would have been No. 1 or close to No. 1, even with the two-day disadvantage," Boyd Chief Financial Officer Ellis Landau said, referring to Borgataís July 2 opening.

"We're quite pleased with our initial results," he said.

Borgata CEO Bob Boughner said the casino has more than 437,000 rated gamblers in its database, which is growing at a rate of 3,000 per day.

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State contractors finally completed a ramp that allows gamblers leaving Borgata to easily connect to nearby Trump Marina.

Donald Trump had been complaining that the failure to complete the ramp before the July 2 opening of Borgata had damaged his business. Gamblers could easily go from Trump Marina to Borgata, but the drive back was convoluted.

Trump and the state split the projectís $12 million cost.

"It's four months late, but it's a positive," Trump said. "We have a big damage claim. We're preparing the numbers now."

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Atlantic City casinos and Global Gaming Business magazine are joining forces to publish a pro-industry magazine targeted to Atlantic City casino employees and vendors.

Casino Connection will be distributed monthly in casino cafeterias and break rooms. The magazine replaces a quarterly newsletter, Casino Industry Political Action Report, that was published by the Casino Association of New Jersey.

Each casino will be represented on the magazineís editorial board but will not participate in its business.

Dennis Gomes, casino association president, said the industry needed a more polished and comprehensive publication to communicate issues with its 50,000 employees. The decision to launch the magazine came four months after the industry lost a legislative battle to avoid a big hike in gaming taxes.

"I think it serves a dual purpose. One is information," Gomes said. "It also puts all the politicians on notice that the casino industry, through its employees, has a significant political power base."

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Atlantic City casinos, slow to catch on to the Las Vegas model of attracting big-name metropolitan restaurants, soon will have a showdown of two major New York-based steakhouses.

Old Homestead opened its first venue outside of the Big Apple at Borgata in July. The Palm, which has spread to more than 25 locations from its Gotham roots, will open in March at Tropicana.

"I can't imagine a table player who wouldn't want to be at The Palm," said Paul Rubeli, chief executive of Tropicana parent Aztar.

Atlantic City's No. 1 casino in table revenue isn't worried.

"We're delighted that they were able to get a couple of good restaurants over there," Borgata CEO Bob Boughner said. "From out standpoint, we have pretty significant demand for our steakhouse product and we think it will compete favorably with The Palm steakhouse."

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