Atlantic City Roundup

Borgata Hotel Casino & Spa helped the Atlantic City gaming industry boost revenue but hurt profit s in its three months of operation.

The dozen casinos generated third-quarter revenue of $1.25 billion, up 6.3 percent, and gross operating profit of $362.8 million, down 5.4 percent. Only one casino, Showboat, managed a year-over-year gain in gross operating profit - a 2.1 percent hike owing to the addition of 544 hotel rooms.

The July 2 opening of Borgata increased the market capacity by about 11 percent but covered only about half of that in revenue growth, leaving other casinos with less revenue but the same operating expenses.

Borgata's gross operating profit of $32.3 million was in the middle of the pack, but the casino finished first in several categories: table games revenue, average room rate and nongaming revenue. Borgata commanded a room rate of $136.19; Hilton was No. 2 at $98.40. Borgata's occupancy, however, was well below average: 80 percent compared to 98 percent for the other casinos. Boyd Gaming officials had previously blamed the low occupancy on a short preopening window to accept reservations, an overwhelmed reservations center and hundreds of rooms not yet opened in the first month of operation.

Slightly more than 26 percent of Borgata's gross revenue came from nongaming sources such as rooms, shows, meals and drinks. The figure was 20 percent for the other casinos.

Bally's led the industry in gross operating profit, or cash flow, at $57.3 million, down 7 percent. Harrah's was second at $51.6 million, down 14 percent.

Harrah's was the most efficient operator with a margin of 44 percent. Caesars was second at 36 percent.

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Donald Trump's gaming company agreed to manage a small casino on Canouan Island in the Caribbean nation of St. Vincent and the Grenadines.

The company provided no details about the project, other than saying it will be a "club-style casino . with a fully array of table games." It's expected to open next summer.

The casino will be the sixth in the Trump Hotels & Casino Resorts portfolio: three land-based casino hotels in Atlantic City, a riverboat casino in Gary, Ind., and a contract to manage an Indian casino in Coachella, Calif.

"It's great to be branching out in the Caribbean. I'm pleased to have the opportunity to participate in making Canouan the Caribbean's next major destination," Trump said.

Trump's private real estate development company will build estate and golf villas as part a broad redevelopment of the three-square-mile island. Master developer Canouan Resorts Development said it expects the project "will attract sophisticated, international travelers."

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Carl Icahn's Sands Casino Hotel continued to tap its cash reserve to fund operations and small capital improvements in the third quarter.

Sands produced earnings before interest, taxes, depreciation and amortization of $3.8 million, down 36 percent, on net revenue of $46 million, down 8 percent, GB Holdings reported. Its net loss almost quadrupled, to $3.5 million, or 35 cents per share.

Sands withdrew $472,000 to fund operations, leaving its cash balance at $38 million as of Sept. 30. That's down from $50 million a year earlier and $71.6 million two years earlier.

"We've tried to use that money for capital funding. We do believe we're making a more modern and comfortable place for our guests," said Tom Davis, Sands president.

Sands' reported a 26 percent gain from its rebuilt table-games department, but the new Borgata caused a 16 percent decline in its slot revenue.

As part of a refinancing of its $110 million in long-term debt, Sands' parent company will be known as Atlantic Coast Entertainment Holdings, or ACE Holdings.

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The New Jersey Department of Labor awarded an unusually large grant of $570,000 to help train more than 4,200 casino workers.

Six other casinos and Local 54 of the Hotel Employees and Restaurant Employees International Union contributed another $957,000 to the program, which is being administered by Atlantic Cape Community College.

Part of the funds were used to train and hire 1,200 workers for Borgata, which opened in June. The program provides 25 courses for 3,000 existing casino works in subjects such as technology, supervisory skills and English as second language.

Participating casinos include Atlantic City Hilton, Bally's, Caesars, Resorts, Tropicana and Borgata.

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Boyd Gaming officials said there are no immediate plans to expand Borgata, downplaying comments made last week by Chief Financial Officer Ellis Landau.

Speaking at the Deutsche Bank Securities Hospitality & Gaming Conference in New York City, Landau said of Borgata's future: "We clearly can expand that. Both our partner and we are looking at expanding it, looking at the items and amenities that we need that we don't have."

Boyd spokesman Rob Stillwell any talks with Borgata co-owner MGM Mirage have been casual.

"There are no clear-cut plans that have been developed - only very good dialogue that addresses the challenges and opportunities of our business," Borgata CEO Bob Boughner said.

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