It’s happening at Atlantic City Hotels and Casinos

Macau’s economy is based on tourism and gambling, much like its counterparts in the US – Las Vegas and Atlantic City. These three places, combined generate more revenue just from gambling than the total market Cap of Bank of America and US Bank combined, in fact they don’t even come close.
Here, we look at the key statistics at the “Terrific three” gambling hubs.

Las Vegas

Las Vegas has long been the world’s gambling hub. High end casinos, unparalleled service and a large variety of entertainment options have kept tourists coming back to Vegas year after year. Leading properties include casinos run by MGM Mirage Inc., Harrah’s Entertainment Inc., Las Vegas Sands Corp and The Wynn Resorts Ltd.

At close to $6.5 Billion in gambling revenues in Las Vegas alone and $12 billion total gambling revenue in the state of Nevada which includes the City of Reno, a smaller gambling hub, it is still arguably the world’s largest entertainment location, even though Macau has exceeded Las Vegas in the last year or so as the world’s largest gambling hub.

Overall, the Las Vegas economy, which includes revenue from tourism, gambling, entertainment and a host of other smaller businesses including conventions, has been increasing 6.5% year after year and is about $110 billion now and is expected to reach $155 billion in 2012. No other location comes even close to that number.

2008, however, has been slower than usual, primarily due to the overall economic slowdown in the US due to the sub prime mortgage crisis.

Atlantic City:

Atlantic City has 11 major casinos and has been the second biggest gambling hub in the US for several decades. Research studies however show that 2007 will be the first year for the drop in revenue, because of the tough competition in the gambling industry.

Many of the old casinos that were there in Atlantic City have been shut down. The Trump Marina Hotel Casino had the biggest decline $11.8 million, and recently, Trump decided to sell this away as well. New casinos have started coming up though and it is unclear at this time what the future of Atlantic City would be.

Overall revenue for casinos in 2007 dropped 2.9% compared with 2006, but the decline in slots revenue was even sharper at 7.2%. The smoking ban, additional taxes, competition from casinos in neighboring states and the overall economic slowdown contributed to the slowdown. Despite these losses, Atlantic City generated $4.94 billion in gambling revenues in 2007, still a very strong number in the US. With new casinos coming up and the closure of the old loss-generating ones, Atlantic City seems to be poised for a comeback. Only time will tell.

Macau:

Gambling revenue in the enclave totaled 55.9 billion patacas ($6.95 billion) in 2006, which includes lottery and racing revenues although the booming bulk came from the casino floor. This may exceed the $6.2 billion generated by the Las Vegas strip. VIPs related revenue was higher but the mass market was slightly lower.

At the end of 2006, Macau had 24 casinos operating 2,762 gaming tables and 6,546 slot machines. In the beginning of the year 2007, with the increase in the gambling revenue by 22% reaching US$ 6.95 billion, Macau dethroned Las Vegas to emerge as the world’s No.1 gambling destination.

The success story of Macau may be due to the fact that the visitors from the nearby areas in mainland China show more interest towards gambling compared to the Americans in Las Vegas, whose people aren’t that interested in gambling in general. Macau is the only place in China where gambling is legal and within the reach of three billion people which positions it well for further growth, much better than Las Vegas and Atlantic City. It is already the world’s largest gambling center by volume and may soon become the largest by revenues as well.

Related Links:

• Wynn Macau Taking shape
• Stories on Atlantic City
• Las Vegas -Nevada

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Given the high costs may be involved for traveling to Atlantic City or Vegas, it seems logical that competition from local casinos and entertainment centers can have a major impact on these two cities. Gone are the days when lady luck worked at these places almost exclusively. These days, the gambling is legal in most states or at least adjacent states for most people. Everyone wants a piece of the gambling action and why wouldn’t they? For decades, this industry has been almost immune to economic downfalls.

With the current state of the economy, patrons are justified when they decide to save their money by settling for a local casino compared to the riches and the jumbo jackpots at Atlantic City and Vegas. Gambling at  local casinos cuts out the cost of transportation as well as bed and lodging. No wonder Casinos at Atlantic CIty and Vegas have lost revenues at a faster rate than local casinos during the first half of the year. All eyes are on Obama and McCain to turn things around!

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It seems that opportunities are becoming a little ripe these days, the latest of such attempts comes from Penn National, which wants to open a casino on Route 30. First of all, the land is not in the casino zone - it is on the outskirts of the city. The next hurdle would be the sewage plant right next door, so even if permission were granted, the smell factor would definitely make it less than a perfect choice for the location of a 24-hour entertainment avenue. The message from the city council also so far is that Penn National has little chance of success, as the current laws only permit development on 3% of the 23-acre land. With many hurdles in the way, one should not hope to see the Penn National casino anytime soon on the White Horse Pike.

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Ever since the casino regulators refused to renew the license of the original Tropicana owner, Columbia Sussex Corp, the Tropicana casino has been in the news, though not for the right reasons. The first news to hit the streets regarding Tropicana was the suspension of the license of the Columbia Sussex Corp. Their license was suspended on account of ‘shoddy’ service and of being ‘dirty’, though not in the way that you would normally equate with a casino. Having suspended the original owners, the New Jersey casino control commission decided to appoint a retired Supreme Court Judge to oversee the sales and the running of the Tropicana casino until the new owners can take over. Bids were invited from interested parties and a decision was expected sometime by April. Judge Gary Stein, however, decided to reject all the bids received so far since he does not believe that any of them warrant any serious consideration. So it is back to square one and with a long road ahead, can one expect more news from the Tropicana front in the near future?

Related Links:

• Tropicana is field of Competing

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Come May, the whole town seems to cotton on to the mood with everyone trying to their luck at the casinos. This May was not all that different, with huge crowds, and the casinos raked in more of the usual. Here are some of the specs for the month of May. Gamblers lost a total of $415 million at the casinos, netting an increase of 1.6% over the last year. The casino winnings at the slot machines was $289.6 million while at the tables, it was $125.7 million. It seems that the current season ’s ‘May fever’ had some good tidings for the casinos after all.

Related Links:

• CASH FEVER casino

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The latest move by the government of Macau limiting new land and halting new casino projects is being seen by many as a road that Atlantic City may have to soon follow. Atlantic City has embraced gambling with both arms ever since it was legalized here 30 years ago. But the questions that many residents of Atlantic City are asking themselves these days is whether it is possible to have too much of a good thing like in the case of Macau. Gambling dens have come to define what Atlantic City is today, despite the many non-gambling attractions that this city can boast of. Some argue that efforts should be taken to improve the city’s image by carving out other less-gaming oriented attractions, so that in the end, people can identify the city as a full-service entertainment offering instead of gambling dens alone.

At present though, nothing seems to point in the direction of such a law at Atlantic City. New casinos are in the process of opening and more are in their planning stages, as reflected in other posts on this blog. But I am sure the thought must have crossed the minds of legislators - can Atlantic City sustain more gambling or should the focus be elsewhere?

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After their last performance in 1983, the Beach Boys made a recent appearance on the 4th of July, rocking Atlantic City down. They had been banned once by the U.S Interior Secretary James Watt for having attracted all sorts of undesirable elements. Of all the hypocritical reasons that a politician could have, that one certainly took the cake. However, it did not prevent fans from attending that concert, and it certainly made fond memories come alive for the ones who attended the latest installment of the Beach Boy almost 25 years ago. This concert was successful. One of the visitors that we talked to commented that he forgot all about his problems, from high gasoline prices to familial issues, while he was at the concert. It was time to rock to the beat of the Beach Boys. Way to go guys!

Related Links:

• Beach Boys on the beach in Atlantic City

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Oil just seems to be taking to new and never before discovered heights and the pressure is telling on everyone. With OPEC standing firm on its decision not to increase production beyond a certain point, all of Atlantic City as well as most of New Jersey had to adjust to the best average rate for one gallon of gas crossing $4. At such rates, it is no wonder that people here do not want to travel as much as they would have preferred to initially for entertainment. This year’s visits to Atlantic City are about 10% lower already, according to estimates by Fox News. Maybe it is high time that we all started cutting back on things that we do not need or things we tend to waste our gasoline on. With gasoline soon to reach newer heights, it is time for conserving what little fuel we have got in our cars today. One tip: do not speed unnecessarily as that burns up the gasoline like nobody’s business.

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A new law signed on Friday offers protection and prevents the racetracks and the casinos from having to deal with closure even in the face of a budget crisis. One does not have to look that far behind to recall the debacle that followed the closure of the racetracks and the casinos in 2006. Gov. Jon Corzine made it apparent that he was backing the bill to the hilt and that it was important for the casinos not to be threatened by closure like the last time around. Seeing that these casinos are one of the largest cash earners for the state, such statements are to be expected from the political figures. But now they have a new law since last Friday, which expressly forbids the closing of the casinos and the racetracks even in the face of a budgetary crisis. Well, reason seems to have taken on an extended vacation of sorts…

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Given the nature of problems that seem to have beset the U.S. Economy of late, it is only natural that Atlantic City feels the brunt of these economic downturns to a certain degree. In addition to the economic woes, there is always the specter of stiff competition from states like Pennsylvania, whose casinos often cut into Atlantic City’s customer base. The casino revenue as well as takes from the slot machines have already fallen by 5% with more to come next year, especially if the situation does not improve, economically, that is. There are quite a few new buildings making waves on the block but what is in the news is not what is being built, but rather, what is not. On account of the current ‘bearish’ season, the Pinnacle Entertainment Inc’s planned Atlantic City casino will now open no sooner than 2012, the delay could extend much beyond that if the current situation does not improve. The Revel Casino project has currently run into some trouble with the financing part and is actively seeking some more, as they need to open up by 2010. One of the projects that did manage to get off ground with some finesse was  the “Water Club”. The new hotels and spas that have made a debut in the Atlantic City scene are quite keen to stress that city has more to offer than just legalized gambling. But whether they want it or not, the future of Atlantic City as a gambling Macau , certainly seems to be on the cards for real.

Related Links:

• Macau’s Big Gamble
• Macau Galaxy Resorts

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