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Atlantic City Casino Q3 Profits Drop

19 November 2003

ATLANTIC CITY, New Jersey – As reported by the Press of Atlantic City: "Borgata Hotel Casino & Spa was a boon for the gaming industry's top line and a bust for its profits line in the third quarter.

"The industry's net revenue increased 6.3 percent, to $1.25 billion, as a result of the July 2 opening of Borgata. Gross operating profit, however, fell 5.4 percent, to $362.8 million, the Casino Control Commission reported Tuesday.

"Raymond Cheesman, gaming analyst for Jefferies & Co., said casinos got stuck with operating costs while Borgata swiped a share of their business.

"…At the bottom line, the industry's net income declined 36 percent, to $59.9 million. The figure, however, means little for most casinos because it includes nonoperating costs, such as management fees and debt payments, that can be imposed by their parent companies. Net income is more meaningful for the city's two independent casinos, Resorts and Sands.

"…Only one casino, Showboat, bettered its results compared to the same quarter last year.

"…Borgata placed second in revenue, at $149.7 million, and seventh in cash flow at $32.3 million. Its advertising and administrative costs were more than twice as high as any other casino's.

"Borgata began fulfilling its promise of attracting more customers willing to pay cash for rooms, shows, meals and drinks than other casinos…"

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