Atlantic City’s casinos likely will take months, not years, as some fear, to recover from Hurricane Sandy, top executives predicted Wednesday in a rare dose of optimism for the struggling gambling industry.
Already, there are signs that business is beginning to rebound, particularly on weekends, as the casinos continue to crawl back from the hurricane shutdown, the executives said during a panel discussion. The 12 casino hotels closed Oct. 28 as Sandy approached New Jersey’s coast and did not reopen until five to eight days later.
Although Sandy has cut deeply into business, the hurricane spared Atlantic City from major damage and was nowhere near as serious as the blow inflicted by Hurricane Katrina on the Gulf Coast casinos in 2005, the executives said.
“It could have been a lot worse,” said Tony Rodio, the chief executive officer of Tropicana Casino and Resort and the president of the Casino Association of New Jersey, an industry trade group. “This could have been a process that took years and years and years to recover from.”
The hurricane’s impact was analyzed during a panel discussion of casino CEOs during the Greater Atlantic City Chamber annual meeting, held at the Stockton Seaview Hotel & Golf Club in Galloway Township.
Other panelists generally agreed with Rodio that Atlantic City should recover within months, not years. However, they stressed that the city must continue to add new attractions to entice customers back to town in the hurricane’s aftermath.
Sports betting and Internet gambling, both delayed by legal and legislative hurdles, would also boost the Atlantic City market, the executives said. They believe that Internet gambling has a better chance to become legal in New Jersey if a proposed bill, now undergoing revisions in the Legislature, satisfies Gov. Chris Christie. The governor vetoed an earlier Internet gambling bill, calling it illegal.
Rodio said he expects a new version of the Internet gambling bill will be on the governor’s desk by the end of the year. The proposed revisions should make it more “palatable” for the governor, but Rodio declined to speculate whether Christie will sign the legislation into law.
“The bill being worked on by both houses of the Legislature addresses the concerns that the governor had,” Rodio said in an interview after the CEO panel discussion.
Sports betting and Internet gambling would complement nongambling attractions that are being built in Atlantic City now or are expected to get under way next year, panelists said.
Tim Ebling, chief financial officer of Resorts Casino Hotel, noted that his casino is counting on a new $35 million Margaritaville-themed expansion project to spur business. The project, expected to be ready by Memorial Day weekend, includes a new beachfront restaurant and bar and Margaritaville-style casino floor space.
Tom Ballance, president and chief operating officer of Borgata Hotel Casino & Spa, said one key element of Atlantic City’s post-hurricane success is to attract more group and convention business. The “Do AC” publicity campaign launched by the casino-funded Atlantic City Alliance marketing coalition has been creating a more positive impression of the city and should result in more conventions, Ballance added.
One worry in Sandy’s aftermath is that customer spending will not return to pre-hurricane levels. Tom Pohlman, general manager of Golden Nugget Atlantic City, said business volumes have increased at his casino in the past two weeks compared to the same time last year. But Pohlman said he has also noticed that customers seem to be more careful with their spending.
“Everybody’s discretionary income goes out the window,” Pohlman said of the Sandy’s impact.
Michael Garrity, chief investment officer at Revel, Atlantic City’s newest casino, said there is a largely untapped market of 47 million adults within the Northeast. Many of those people spurn Atlantic City now, but could become customers if the casinos evolve into resort-style attractions that offer far more than gambling, he added.
“If we allow Atlantic City to evolve, we will achieve it,” Garrity said.
During the panel discussion, Garrity made no mention of Revel’s well-documented financial struggles. Afterward, he left without commenting.
Revel, a $2.4 billion luxury megaresort, has been mired near the bottom of the pack in gambling revenue each month. It has suffered a combined $72 million gross operating loss through its first six months in business.
Revel, in filings with the federal Securities and Exchange Commission, has warned of the possibility of bankruptcy or foreclosure as it deals with its $1.3 billion debt. The casino is in discussions with lenders to line up an undisclosed amount of new financing within the next 45 days.
Revel spokeswoman Maureen Siman downplayed the language in Revel’s security filings. She said the bankruptcy and foreclosure warnings were intended to advise investors of the potential financial risks.
Last week, New Jersey Senate President Stephen Sweeney, in a letter to the state Division of Gaming Enforcement, said Revel was burning through its cash at an “alarming rate” and faced financial peril. In response to the letter, Revel released a statement denying that its financial situation was “dire,” a word Sweeney had used to describe the casino.
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