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Gaming Guru

Joe Weinert
 

Atlantic City Roundup

9 September 2003

More than 300 workers at Donald Trump's casino company are unemployed this week after another round of cost-cutting in the wake of rough financial results.

Those laid off were full-time, year-round employees mostly at supervisory and middle-management levels at Trump Taj Mahal, Trump Plaza and Trump Marina, according to Craig Keyser, the companyâsâ executive vice president of human resources and administration.

"You have to look at your largest expense line and thatâs no different than any other business in this industry or this country, and weâve done that. We don't want to make labor reductions, but it is necessary," Keyser said.

The opening of the $1.1 billion Borgata Hotel Casino & Spa led to combined 9 percent revenue decline at the three Trump casinos in July. The companyâs first-half gross operating profit was $126 million, down 15 percent.

While the results, along with the higher casino taxes enacted by Gov. James McGreevey in July, played a role in the job losses, Keyser said, the Trump casinos are always looking to cut costs.

"This is the season when you aggressively explore labor savings. This is now new for any casino in Atlantic City and certainly not new for us," he said.

Officials at eight of the nine other casinos, however, said they are not laying off employees. A Borgata spokeswoman did not return a phone call.

Tom Davis, president of Sands Casino Hotel, said it might just be a matter of time before other casinos take similar action as they cope with lost market share.

"As time goes on, everyone is going to have to make Borgata-related decisions," Davis said.

Meanwhile, anxiety was rampant in the 12,000-employee Trump workforce.

"Everybodyâs scared," said a Taj Mahal casino supervisor.

"They gave us a $50 bonus right after Borgata opened, something to thank us for staying here, only to have layoffs a couple months later," said a day-one Taj food-and-beverage employee. "A lot of these (laid off) people could have applied for jobs at Borgata."

The Trump casinos are helping affected employees find jobs elsewhere in the company or at other casinos, Keyser said.

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Nearly 400 of the worldâs best poker players, from 32 countries, are at Trump Taj Mahal through Sept. 19 for the seventh US Poker Championship.

"We like to be No. 2, behind the World Series of Poker," said Tom Gitto, who manages the 66-table Taj poker room. "This is going to be a big test to see how big we get this year."

This year's tournament, the first held in late summer, drew about 100 players more than last yearâs, which was held in December.

The finals -- a three-day No Limit Texas Holdâem event -- takes place Sept. 17-19. It will be televised later on the Travel Channel.

Last yearâs champion, John Hennigan, took home $216,000.

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The New Jersey Casino Control Commission late this week will release the eagerly awaited August revenue results, which will show whether the new $1.1 billion Borgata expanded the market or chiefly cannibalized other casinos, as it did in July.

"Our sense is August was generally a strong month in the market (early Labor Day) across the board with most of the major operators in our coverage universe (Harrah's Entertainment, Park Place Entertainment and Aztar) generating roughly flattish slot revenues," Deutsche Bank Securities analyst Marc Falcone told his clients.

"We have also heard that high-end table play continues to rebound and was strong during August. We believe part of the return of high-end play is attributable to the opening of Borgata, which may be attracting new players (or players who haven't been to the market in a while)," Falcone said.

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Whatever gaming-revenue number Borgata reports this week, it won't tell the whole Borgata story, CEO Bob Boughner said.

Some 23 percent of the casino hotelâs business is coming from nongaming sources, about twice the Atlantic City average, Boughner said. Of that amount, 60 percent is cash business in a town famous for comping its food, beverage and hotel rooms.

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Atlantic City casino executives are again keeping an eye on neighboring Pennsylvania, whose Legislature returns to work this week. A plan to allow racetrack slots seems destined to pass at some point but several proposed ideas failed earlier this year.

"We're hearing rumblings that a new, more conservative slots proposal may be unveiled," JPMorgan analyst Harry Curtis told his clients. "Though we believe a return to a more conservative installation of slots increases the likelihood of legislation passing, the introduction of a new bill could further slow the process and lead to the issue being pushed back to 2004."

(Joe Weinert will be off next week. Hecovers the gaming industry for The Press of Atlantic City. He can be reached at jweinert@pressofac.com.)