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Analyst: Atlantic City Can't Thrive by Gaming Alone

20 November 2002

ATLANTIC CITY, New Jersey – As reported by the Press of Atlantic City: "Tower cranes are changing the city's skyline by the month as Borgata Hotel Casino & Spa has spawned a $1.7 billion casino building boom that will result in 4,000 more hotel rooms and 18 acres of retail, dining and entertainment within two years.

"Just over the horizon, at not-too-distant points north, west and southwest, states are preparing to allow more than 36,000 slot machines and table-games seats at Indian casinos and racetracks within four years.

"Hence the question mark in a Wall Street report issued Tuesday morning, `A New Day Dawning in Atlantic City?' by Bear Stearns & Co. analyst Jason Ader.

"The key to Atlantic City's future, he said, is a continuing emphasis on entertainment, retail and dining to separate the city from the `plain-vanilla' racetrack slot parlors expected to sprout in Maryland, Pennsylvania and New York.

"…Atlantic City is off to a good start with the resort-oriented Borgata and themed retail-entertainment projects at Caesars and Tropicana, Ader said, but `would be well served' with even more such development.

"Atlantic City casinos have tremendous potential in nongaming business, Ader said. Their annual gambling revenue is only slightly less than on the Las Vegas Strip, yet Las Vegas casinos generated $6 billion in gross revenue from shows, rooms, food, drinks and other nongaming amenities compared to less than $1 billion for Atlantic City casinos.

"…Borgata `will set the standard for future gaming and nongaming development in Atlantic City,' Ader said. That helps explain why Harrah's, Showboat, Resorts, Caesars and Tropicana have spent or are spending a combined $700 million on hotel rooms, retail, entertainment and dining.

"…Ader assumes that Atlantic City will be hurt by 10,000 slots at four eastern Pennsylvania tracks, 9,000 slots at Maryland tracks, and 18,600 slots and table-games seats at three Catskills Indian casinos and three southeastern New York racetracks…"

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