Some gamblers at Atlantic City's closing casinos will not return: Fitch

Reuters News
Posted: Aug 29, 2014 2:07 PM

By Hilary Russ

(Reuters) - Four Atlantic City casinos are closing this year, but not all of their gamblers will return to visit eight others that have survived in the down-on-its-luck New Jersey resort.

Fitch Ratings analyst Alex Bumazhny said on Friday that some gamblers are expected to choose instead casinos in their home-states. The casinos remaining open in Atlantic City are likely, however, to garner about 60 percent of the revenues that had been generated by the four closing casinos, Bumazhny said.

A third of Atlantic City's casinos have closed or soon plan to. The city's newest casino and arguably its biggest failure, the $2.4 billion Revel Casino Hotel, is in its second bankruptcy after opening in 2012. It is closing on Tuesday.

The Showboat Casino Hotel, a Caesars Entertainment Corp property, will shut down on Sunday morning, and Trump Plaza Hotel and Casino is due to close in mid-September. Atlantic Club Casino Hotel was shuttered in January.

Those four generated $457 million through the 12 months that ended in July. About $280 million will likely be recaptured by surviving casinos, Fitch's Bumazhny said in a comment, with more than half going to properties owned by Ceasars.

Some of the closed casinos catered to low-margin gamblers, offering excessive promotions. The remaining casinos are less likely to target those customers with such incentives, and instead will remain focused on high-end gamblers, Bumazhny said.

Even some of those big-spenders might simply choose other places, such as the Sands Casino Resort in Bethlehem, Pennsylvania, owned by Las Vegas Sands Corp. Remaining Atlantic City casino hotels also have limited room capacity and are sometimes already full on weekends.

All of Atlantic City's casinos combined earned $2.7 billion in revenues over the year that ended in July. Fitch does not expect any more casinos to close over the next two years, Bumazhny said.

He said the industry will still earn about $2.5 billion in 2015, but it will deteriorate in the coming years to about $2 billion because of increased competition from neighboring states.

But Atlantic City will remain attractive, according to Bumazhny. He said it is one of the few places in the New York-New Jersey-Connecticut area to offer a complete package of places to eat, play and stay, and has "by far" the lowest gaming tax in the region at 9.25 percent.

(Reporting by Hilary Russ in New York; Editing by Grant McCool)