What's Taking a Bite Out of Atlantic City Casinos?

This is the first in a two-part report.

Hear Part 2 of This Report

There's an old line among gamblers: The only way to make money in a casino is to own it.

In Atlantic City, N.J., the line is still true, but perhaps not quite as true as it once was. That's because casinos have seen profits fall as competitors from neighboring states have elbowed their way onto the gambling table.

Last year, for the first time ever, revenues declined. Sure, the casinos took in almost $5 billion dollars — but the year before it was more than $5 billion.

In the past, Atlantic City casinos' revenue increased every year. Casino operators could congratulate themselves on figuring out the market: Throw limo rides and Mel Torme tickets at the big spenders and round out their own fortunes by busing in little old ladies eager to slide their quarters into slot machines.

It's a gross stereotype, but things used to be that simple. But when revenues took a dip, the old way of doing things stopped seeming reliable and started seeming antiquated.

Nearby Competition

Michael Pollack is a long-time casino consultant and editor of the Gaming Industry Observer newsletter.

"You gotta understand that, for most of its existence, Atlantic City largely had a monopoly on East Coast casinos. In that earlier era, you did not have to work particularly hard to operate at close to capacity. The customers were there because they really couldn't go anywhere else," Pollack says.

But now they can — and do. Two huge Indian casinos in Connecticut opened a decade ago. Casinos at racetracks in Pennsylvania and Delaware also are cutting into Atlantic City's profits. A casino in downtown Philadelphia should soon be under construction. There's also a new slots-only parlor in Yonkers, N.Y.

Dawn Canella, from Wallington, N.J., plays the slots and has been going to Yonkers because it's closer than Atlantic City. And, Canella says, Atlantic City casinos have been taking slots players for granted.

Canella is the type of gambler who has been written off by the city's leading casinos. The Borgata has gone after more youthful, upscale visitors who were once, in the parlance of Borgata's internal marketing department, "Atlantic City rejecters."

Michael Facenda, the Borgata's director of marketing services, says that when his casino was built in 2003, the city's general mindset was "if it ain't broken, don't fix it. ... When we came in, we just knew there could be more."

Today, the Borgata is Atlantic City's most profitable casino and an exception to the rule of declining revenue.

On Borgata's gaming floor, the roulette wheel spins true. Over at the craps table, a hard eight still pays 9-to-1, just like everywhere else. By law, the games can't change. But everything else at the Borgata stands out.

Unlike the older Atlantic City properties, there are no stains on the carpet and the "Borgata Babes" are similarly unblemished. These cocktail waitresses must sign an agreement stipulating they'll stay within a few pounds of their weight when hired.

The Borgata offers spas, restaurants, bars, concert tickets — amenities that newsletter editor Pollock calls "other cash registers on the floor."

Empire City

Bobby Alameda is a promotions booth supervisor at Empire City Casino in Yonkers, three miles north of New York City.

"I know for a fact that we're hurting Atlantic City because a lot of their high rollers are coming here and they love it here because they're minutes away," Alameda says.

Empire City is a slots-only "racino," the newest trend in casinos. It combines racetrack betting and a casino.

Racinos are proving to be a burr in the saddle of Atlantic City while at the same time promising salvation for the horse-racing industry.

Comments

 

Please keep your community civil. All comments must follow the NPR.org Community rules and terms of use, and will be moderated prior to posting. NPR reserves the right to use the comments we receive, in whole or in part, and to use the commenter's name and location, in any medium. See also the Terms of Use, Privacy Policy and Community FAQ.