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Casinos hit by sluggish economy

"The credit crisis has claimed two projects so far, and could spread out to threaten other developments and the sale of the Tropicana Casino and Resort, analysts warn.

"…Borgata, Atlantic City's top-grossing casino, has avoided steep declines in revenue, but other gaming companies haven't been so lucky in the economic slump.

"The Atlantic City Hilton Casino Resort, hurt by a nearly 8 percent drop in gaming revenue last year, disclosed in late January that it would put a proposed billion-dollar expansion on hold until the economy picks up and the credit markets recover.

"The second casualty came Tuesday, when Pinnacle Entertainment Inc. announced it would delay construction of its proposed $1.5 billion megaresort until 2009 and could scrap the project altogether if the credit markets don't improve.

"…One analyst, Cory H. Morowitz, chairman of Morowitz Gaming Advisors LLC, believes that the next wave of casino projects will be built, but declined to predict exactly when.

"…Although expansion projects would take years to complete, a more immediate concern is how the credit crunch will affect the sale of Tropicana. The Boardwalk casino is in search of a new buyer following the New Jersey Casino Control Commission's decision on Dec. 12 to strip its troubled former owner, Columbia Sussex Corp., of its license.

"Analysts have estimated Tropicana could fetch $1 billion in an auction. Morowitz thinks the number of would-be buyers could be limited by turbulence in the credit markets.

"…Analyst Joel H. Simkins, of Macquarie Securities Inc., expressed confidence in Atlantic City's longterm future. He dismissed the bearish tone currently pervading Wall Street and praised Pinnacle for delaying its project until the credit markets perk up…"

copyrighted material written for and appeared exclusively in The Press of Atlantic City

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