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Gaming Guru

Joe Weinert
 

Atlantic City Roundup

6 January 2004

ATLANTIC CITY -- Atlantic City casinos dodged another competitive bullet when Pennsylvania legislators failed to agree on a gambling-expansion plan in their year-end budget negotiations.

The issue was not whether to legalize casinos and racetrack slots, but to what extent. Legislators appeared to agree on a plan for up to eight racinos and up to three stand-alone slot-machine casinos, including at least one each in Philadelphia and Pittsburgh.

The issue died because Vincent Fumo, a powerful state senator from Philadelphia, insisted that any gambling bill also allow for two Indian casinos. Fumo argued that it was best to include Native Americans in a state-crafted plan rather than have them pursue independent operations that could not be taxed or regulated by the state.

It remains to be seen whether Pennsylvania legislators restart gambling talk later this month.

"Given that the issue of slots is no longer necessary to balance the budget, and state budget deficits are likely to improve along with the economy, we believe that the probability that gaming will be legalized in Pennsylvania near-term is diminishing," Merrill Lynch analyst David Anders said.

In any event, Atlantic City gaming bosses say it's only a matter of time before casino-style gaming springs up next door in Pennsylvania ñ as well as in Maryland and possibly other states in the region.

"I think we've always contended there would be an expansion of gaming in the Northeast," said Robert Stewart, spokesman for Park Place Entertainment, Atlantic City's biggest casino company.

"I think Atlantic City has made tremendous progress in the last 18 months in creating attractions and entertainment that distinguish it as a resort, and I think it has prepared itself well for the inevitable expansion of gaming in nearby jurisdictions," he said.

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Although Colony Capital will become fifth company to operate casinos in both Atlantic City and Las Vegas, don't look for any ties between Resorts Atlantic City and the company's latest acquisition, the Las Vegas Hilton.

"They are independent. There is not a plan right now to commingle the businesses in any way," Colony spokesman Owen Blicksilver said.

Colony's strategy it to buy underperforming assets, invest in them, turn around operations and sell them within 10 years, so creating synergies between dissimilar properties might not make sense.

Nicholas Ribis, former CEO of Donald Trump's casino operations, will have an equity stake and executive position in the Las Vegas Hilton, as he has at Resorts.

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While still far below its all-time high of $35.50 in 1996, shares of Trump Hotels & Casino Resorts finished last year with a 39 percent gain over the final four weeks.

Shares of Donald Trump's casino company closed $2.16 in generally heavy trading over that period. Analysts said they believe Trump might have been buying more shares. Trump said he could not comment on that.

"I think people realize it's potentially a wonderful company. People realize I've gotten much more involved in the last six months," Trump said.

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Eric Hausler, a gaming analyst with Susquehanna Financial Group, filed this report after cycling through Atlantic City casinos on New Year's Eve:

"Generally, late afternoon business volume was roughly comparable to a winter weekend day in Atlantic City, largely because many customers had to work during the day. Business volumes accelerated rapidly after 8 p.m. and remained strong until well after midnight. By 9 p.m. or 10 p.m., we found most casino floors busier than they would be on a summer weekend night during the peak season.

"We generally found business volumes very strong at Borgata, Caesars and Bally's, and Harrah's and the Showboat. We did not find the Tropicana as busy as its competitors, particularly on the table side of the business.

"We also visited the Trump Plaza, Taj Mahal, and Resorts. Trump Plaza was doing good business in the peak part of the evening (11 p.m.), in our view, while the Taj was somewhat slower than our expectations, although still early in the night (8 p.m.). Volumes at Resorts on both the slots and tables appeared solid, in our view."

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