Panelists: New York casinos could see Atlantic City closures

Panelists at a major casino industry conference said the construction of three new casinos in New York could cost Atlantic City 20% to 30% of its casino revenue, a development that could possibly return the resort to the days of casino closures.

While not predicting that it will definitely happen, Jim Allen, chairman of the global Hard Rock casino, entertainment and hospitality company, on Thursday said that such a revenue drop could lead at least one Atlantic City casino to close. Hard Rock, which owns a casino in Atlantic City, is among the bidders for a New York casino.

Speaking at the East Coast Gaming Congress, Allen warned that New York's coming casinos will have a big effect on Atlantic City.

“It could happen,” Allen told The Associated Press in an interview after his speech. “Atlantic City receives 20, 30-plus percent of its revenue from upstate New Jersey and downstate New York, and there's no doubt it is going to have an impact on this particular market.”

Allen's Atlantic City casino, along with the market-leading Borgata, and the Ocean Casino Resort are currently the top performing casinos in the market in terms of money won from in-person gamblers.

“So you have three or four that are very strong and then I think there's a question as to what happens in that next level down,” he said. “I think its a concern that if these other casinos don't perform, then inevitably from a business standpoint, is there vulnerability? I don't think that changes unless there's enhancement to the perception of Atlantic City.”

Allen has been a frequent critic of conditions in Atlantic City, including perceptions of cleanliness and safety for visitors. He acknowledged progress has been made, but said more remains to be done.

Mark Giannantonio, president of Resorts Casino and of the Casino Association of New Jersey, declined comment on Allen's remarks.

At the same conference on Wednesday, several Wall Street analysts also predicted New York casinos will take a bite out of Atlantic City's business.

Duane Bouligny, managing director at Wells Fargo said Atlantic City casinos that continue to invest in their businesses and have good leadership will grow.

“The ones that don't will get right-sized or shut out of the market,” he said, adding “this is going to be a very long process.”

David Schwartz, a gambling historian with the University of Nevada Las Vegas, said a lot depends on how Atlantic City's nine casinos react to the new competition.

“While it’s possible that one or more casinos could fold their tents and exit the market, there is also an opportunity for casinos to expand their offerings and give New Yorkers a reason to drive down to” Atlantic City, he said. “After all, millions of people who live within a short drive of casinos fly to Las Vegas every year. Diversification of amenities and a focus on superior customer service for gamblers might offset the convenience of ‘local’ casinos in New York.”

Allen said the revenue numbers reported by the state each month give a misleading picture by including sports betting and internet gambling revenue. That money must be shared with third-party providers and is not solely for the casinos to keep.

The casinos' key business, money won from in-person gamblers, “has been going backwards or flat, depending on the property, since last May,” he said.

Atlantic City has been trying for years to diversify its business model to make it less reliant on gambling. That has included investments in new hotel rooms, restaurants, entertainment and conference venues, and shopping and personal care amenities.

A $100 million year-round water park is due to open this year, and Caesars Entertainment is adding a new entertainment venue and a Vegas-style residency show.

A decision on who is awarded licenses to build the casinos is not expected until sometime later this year.

Hard Rock had announced plans to develop a casino in the northern New Jersey Meadowlands, just outside New York City, before a statewide referendum on the topic was resoundingly defeated by voters. He said Thursday the plan “is still there,” but said Hard Rock, like everyone else, is “trying to evaluate the landscape. It depends upon the opportunity.”

Allen noted there are no current plans for another referendum on a north Jersey casino, and said he was not aware of any sentiment among state lawmakers to revive the issue in the near future.

Jeff Gural, who runs the Meadowlands Racetrack where a Hard Rock casino would be built, said New York casinos “would make it easier for me to get a casino in the Meadowlands.”

“I can't imagine people would think driving over the George Washington Bridge, paying $18 in tolls and sitting in traffic is preferable to going to a casino in the Meadowlands,” he said.

Allen used a play on Atlantic City Mayor Marty Small's signature line that it's “a great day in Atlantic City” in describing the threat from New York casinos.

“I can tell you this: If we lose 20 to 30% of our business, it is not going to be a great day for Atlantic City,” he said.

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