Revel casino gambling revenue underwhelms in May
"Revel's results came in weaker than expected," said analyst John…
Despite the much-anticipated addition of the Revel mega-casino, Atlantic City saw a heavy decline in gambling revenue last month, prompting some operators to question openly whether the $2.4 billion newcomer would provide the economic lift the resort had hoped for.
The city's total gambling revenue was $263 million in May, down 9.5 percent compared with a year ago. Excluding Revel, revenue declined 14.3 percent.
"Revel's results came in weaker than expected," said gambling analyst John Kempf of Wells Fargo Securities L.L.C. Revel had gambling revenue of $13.4 million in April, its first full month in operation; it posted $13.9 million last month, again ranking eighth among Atlantic City's dozen casinos.
"With the grand opening on Memorial Day weekend, we were expecting more of a robust performance," Kempf said.
Revel chief executive Kevin DeSanctis declined comment on the May figure.
The Christie administration has a particular interest in Revel's success. Last year, New Jersey contributed $261 million in tax credits to aid in the casino's completion.
The large decline experienced by virtually all of Atlantic City's casinos in May suggests a "systematic issue," Kempf said. That issue is intensifying regional competition, said Tony Rodio, chief executive of the Tropicana, which posted the smallest revenue decline, 2.1 percent, among the city's gambling halls.
"Everybody should be worried regardless of the market," Rodio said. "Even if you're in Pennsylvania, and even if you're just opening a new property, there is so much saturation now, everyone should be worried.
“It certainly does not help when you get another 4,700 slot machines in the Northeast Corridor," Rodio said, citing last week's opening of the Maryland Live! casino outside Baltimore. Maryland used to be a feeder state for Atlantic City, just like Pennsylvania and New York, which also now have their own gambling emporiums.
"If you look at the quarterly reports, more so than the monthly revenue reports, they actually show profit growth" in Atlantic City when all types of revenue are tallied, Rodio said.
"We are doing all we can to grow nongaming," he said. That effort includes a half-decade, $30 million-a-year rebranding campaign by the recently created Atlantic City Alliance to tout the resort's charms. Each of the print and broadcast ads, which debuted in mid-April, highlights a non-gambling attraction. None features table games or slot machines.
For years, the Gambling Industry has denied CRIME and poverty.
The city's total gambling revenue was $263 million in May, down 9.5 percent compared with a year ago. Excluding Revel, revenue declined 14.3 percent.
"Revel's results came in weaker than expected," said gambling analyst John Kempf of Wells Fargo Securities L.L.C. Revel had gambling revenue of $13.4 million in April, its first full month in operation; it posted $13.9 million last month, again ranking eighth among Atlantic City's dozen casinos.
"With the grand opening on Memorial Day weekend, we were expecting more of a robust performance," Kempf said.
Revel chief executive Kevin DeSanctis declined comment on the May figure.
The Christie administration has a particular interest in Revel's success. Last year, New Jersey contributed $261 million in tax credits to aid in the casino's completion.
The large decline experienced by virtually all of Atlantic City's casinos in May suggests a "systematic issue," Kempf said. That issue is intensifying regional competition, said Tony Rodio, chief executive of the Tropicana, which posted the smallest revenue decline, 2.1 percent, among the city's gambling halls.
"Everybody should be worried regardless of the market," Rodio said. "Even if you're in Pennsylvania, and even if you're just opening a new property, there is so much saturation now, everyone should be worried.
“It certainly does not help when you get another 4,700 slot machines in the Northeast Corridor," Rodio said, citing last week's opening of the Maryland Live! casino outside Baltimore. Maryland used to be a feeder state for Atlantic City, just like Pennsylvania and New York, which also now have their own gambling emporiums.
"If you look at the quarterly reports, more so than the monthly revenue reports, they actually show profit growth" in Atlantic City when all types of revenue are tallied, Rodio said.
"We are doing all we can to grow nongaming," he said. That effort includes a half-decade, $30 million-a-year rebranding campaign by the recently created Atlantic City Alliance to tout the resort's charms. Each of the print and broadcast ads, which debuted in mid-April, highlights a non-gambling attraction. None features table games or slot machines.
For years, the Gambling Industry has denied CRIME and poverty.
"But I'm not saying that I'm not disappointed in the overall Atlantic City market," Rodio said.
Analysts said they expected June to be the real indicator of how Revel will perform, since its amenities, including 1,800 rooms and 14 restaurants, all will be open. The casino's 55,000-square-foot shopping galleria is to be phased in over the summer.
Last month also had one fewer Sunday than May 2011, analysts said. Sunday is typically a profitable day for casinos.
The only casino to post a year-over-year increase, 1 percent, was the Golden Nugget, formerly the Trump Marina Casino Hotel.
Most of the other properties experienced double-digit declines, with five posting a year-over-year drop of more than 20 percent, including Trump Plaza (down 27 percent); Resorts (down 23.9 percent); Bally's (down 22.9 percent); Trump Taj Mahal (down 22.4 percent); and the Atlantic Club (down 20.8 percent). Even market-leading Borgata declined 10.6 percent last month.
"We believe existing A.C. operators will suffer revenue declines through the busy summer months" that will get worse as the year draws to a close, Andrew Zarnett, gaming analyst at Deutsche Bank A.G., said in a note to investors on Monday.
"Last month, we noted that everybody's a loser post Revel's opening, as casino operators will face cannibalization," Zarnett said. "Today's results reaffirm that view."
http://articles.philly.com/2012-06-12/news/32196058_1_gambling-revenue-gambling-emporiums-slot-machines
Analysts said they expected June to be the real indicator of how Revel will perform, since its amenities, including 1,800 rooms and 14 restaurants, all will be open. The casino's 55,000-square-foot shopping galleria is to be phased in over the summer.
Last month also had one fewer Sunday than May 2011, analysts said. Sunday is typically a profitable day for casinos.
The only casino to post a year-over-year increase, 1 percent, was the Golden Nugget, formerly the Trump Marina Casino Hotel.
Most of the other properties experienced double-digit declines, with five posting a year-over-year drop of more than 20 percent, including Trump Plaza (down 27 percent); Resorts (down 23.9 percent); Bally's (down 22.9 percent); Trump Taj Mahal (down 22.4 percent); and the Atlantic Club (down 20.8 percent). Even market-leading Borgata declined 10.6 percent last month.
"We believe existing A.C. operators will suffer revenue declines through the busy summer months" that will get worse as the year draws to a close, Andrew Zarnett, gaming analyst at Deutsche Bank A.G., said in a note to investors on Monday.
"Last month, we noted that everybody's a loser post Revel's opening, as casino operators will face cannibalization," Zarnett said. "Today's results reaffirm that view."
http://articles.philly.com/2012-06-12/news/32196058_1_gambling-revenue-gambling-emporiums-slot-machines
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