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Gaming Guru

Joe Weinert
 

Atlantic City Roundup

18 August 2003

The highly anticipated July revenue results out of Atlantic City indicated that the new Borgata Hotel Casino & Spa mostly cannibalized other casinos rather than expand the market in its first month of operation.

The Atlantic City casino industry reported gross gaming revenue of $436.1 million, up 4.4 percent over the same month last year, according to official figures released by the New Jersey Casino Control Commission. While such a growth rate is considered decent in most months, gaming executives and analysts were expecting Borgata to power the city to bigger growth.

"Overall we found the July results for Atlantic City slightly disappointing, but we are not ready to start cutting numbers after one month of data," Merrill Lynch analyst David Anders said in a research note.

Mark Brown, chief operating officer for Trump Hotels & Casino Resorts, almost faulted Borgata for not fulfilling a promise of bring extra business to Atlantic City.

"Everything they said in the very beginning was that they were going to grow the market and we hope they do, but if they don't grow the market, it's going to hurt Atlantic City, hurt the other properties," he said.

"Now their plan is to take market share and grow the market later," Brown said.

Borgata itself performed well, placing fourth on the revenue list at $46.9 million in its 29 days since opening July 2. Bally's was first at $63.4 million, followed by Trump Taj Mahal at $48.8 million and Caesars at $48.2 million.

"Borgata is off to a great start. We've established and a strong foundation and will continue to build on our business going forward. It was a great 29-day month for us," Borgata spokesman Michael Facenda said.

Borgata did finish first in win-per-unit-per-day in slots ($333) and tables ($4,426).

Only three casinos reported revenue increases: Atlantic City Hilton, Showboat and Taj Mahal. And only the Hilton did not lose market share to Borgata, staying even with last year's results with 6.7 percent of the market.

Dave Jonas, the Harrah's Entertainment executive in charge of Atlantic City operations, warned that if Borgata doesn't grow the market during the jam-packed summer months there could be a costly marketing war after Labor Day.

"I'm a little concerned," Jonas said.

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Atlantic City casinos were expecting a boost in business last weekend (Aug. 16-17) due to the Northeast power outage that begin Thursday afternoon.

Although the casinos' vital bus service was disrupted by the power outage in New York City and northern New Jersey, numerous residents from that region headed to the air-conditioned comfort of the casinos to escape their electrical problems and related traffic jams.

"We are hopeful to see an increase in business volume this weekend, as people from the affected areas look to Atlantic City and the Jersey shore as a convenient weekend getaway," said Brian Cahill, spokesman for the three Park Place Entertainment casinos.

Some bus riders were at least temporarily stranded at casino bus terminals, unable to get back to New York City. The biggest bus companies had resumed service by Friday morning, but casino officials still reported some disruption.

"The impact is minimal," said Tropicana spokeswoman Maureen Siman.

Through June, an average of 888 casino buses arrived daily in Atlantic City, delivering 23,499 gamblers.

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Borgata co-owner MGM Mirage suspended construction of a giant slot-machine casino at a New York City racetrack because the track's owner is under federal investigation.

The New York Racing Association and MGM Mirage had begun demolishing a building at Aqueduct Race Track, but NYRA could be indicted for allowing track employees to launder money, gamble and engage in loansharking. State Attorney General Eliot Spitzer two months ago accused NYRA of "rampant criminal activity."

If NYRA is indicted, the association said, MGM Mirage would altogether pull out of the racino project. The racino could have opened as early as December with 4,500 video lottery terminals.

NYRA and MGM Mirage officials have met with federal authorities in a bid to avoid an indictment, the Albany Times Union reported.

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The New Jersey Casino Control Commission voted 5-0 to disqualify a former executive of the country's fifth-largest demolition firm because of his association with organized crime.

Charles DiMaria, operations manager for Mazzocchi Wrecking (formerly Maztec) of East Hanover, N.J., argued that there was no direct evidence linking him to the DeCavalcante crime family.

"The Division of Gaming Enforcement relies on inference and not evidence," DiMaria's lawyer, Brian Molloy, told commissioners. "It's clear why they take that position -- there's no evidence."

The DGE noted that DiMaria had a long business and personal relationship with Pino Schifilliti, a DeCavalcante captain. DiMaria also agreed to a lifetime ban from laborers union over which he presided after authorities said the local was influenced by the mob.

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In a pre-emptive move, the Atlantic County Chamber of Commerce adopted a resolution opposing any attempt by Gov. James McGreevey to allow video lottery terminals at racetracks.

McGreevey formed a committee to explore legalizing racinos last winter, but the idea died after the group met just once. Southern New Jersey political and business leaders fear McGreevey will revive the idea this winter, particularly since he and the casino industry had a falling out last spring over higher gaming taxes.

State Sen. William Gormley, a Republican representing Atlantic City, has challenged McGreevey to publicly state that he will not pursue racinos without a popular vote. The governor has yet to respond.

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