Sandy contributes to record 28 percent decline in November casino revenue
Hurricane Sandy clobbered the Atlantic City casino market again in November, helping send revenue to the biggest monthly decline in the resort’s 34-year history of legalized gambling.
Total revenue from slot machines and table games fell 28 percent, to $176.6 million, compared with $244.9 million in the same month last year, the state Division of Gaming Enforcement reported Monday. Slot revenue slipped 27 percent, to $126.1 million, while table game winnings were off nearly 30 percent, to $50.5 million.
November’s plunge eclipsed what had been Atlantic City’s previous biggest monthly decline ever, a 20 percent drop in October to which Sandy also contributed.
The hurricane forced the casinos to shut down Oct. 28, and they did not reopen until five to eight days later. For the five days that most of the casinos were closed, the industry lost an estimated $5 million per day, casinos executives said. Even if that $25 million in lost revenue were added to November’s results, boosting the total take to about $201.6 million, the market still would have been down about 18 percent.
John Kempf, a casino analyst for RBC Capital Markets, bluntly said that Sandy has “decimated” Atlantic City’s gambling revenue. He raised concerns that the hurricane’s effects could linger for months to come.
“The real issue remains the lost visitation by people who were severely impacted by the storm. It is our opinion that it will take a number of months for volumes to return to normalized levels,” Kempf wrote in a note to investors.
All 11 casinos that were open in 2011 were down double digits for November except for Golden Nugget Atlantic City, which had only a fractional decline overall because of its strong table games revenue.
Revel, Atlantic City’s newest casino, had $6.2 million in gambling revenue for November, putting it next to last. Only Trump Plaza Hotel and Casino did worse than Revel, making just $4.9 million.
For Revel, November’s results add to the casino’s financial difficulties since its April 2 opening. In its recent filings with the federal Securities and Exchange Commission, Revel has warned of the possibility of bankruptcy or foreclosure as it struggles with its $1.3 billion debt.
However, Revel CEO Kevin DeSanctis issued a statement Monday insisting that he has confidence in the company’s business strategy. Revel recently shook up its marketing team and plans to make upgrades to the casino floor and restaurants to attract more customers.
“We remain focused on our overall casino experience,” DeSanctis said, adding that Revel is banking on a solid end to 2012 with a series of New Year’s Eve weekend events headlined by rap superstar Kanye West.
At the same time, DeSanctis noted that both Revel and Atlantic City were harmed in November by major hurricane damage to the feeder markets of North Jersey and New York.
“Clearly, the visitation was impacted as those areas work to get their lives back to some type of normalcy. We are hopeful that as those areas recover, so will the visitation to Atlantic City,” he said.
Revel’s business was also hurt by storm-related cancellations by more than 20 groups that had booked events at the $2.4 billion megaresort. However, most of those groups have since rebooked, DeSanctis said.
“This is an important segment of our business, and we are focused on rebooking the remaining groups and driving new business in this area,” he said.
Despite the huge decline overall for November, the Division of Gaming Enforcement said the market showed “some resiliency” during the last three weeks of the month, when the casinos were fully reopened.
Liza Cartmell, president of the Atlantic City Alliance, a casino-funded marketing coalition, said the city had to overcome misleading images in the national media, including false reports that the Boardwalk had been destroyed by the hurricane.
“It shows more resiliency for the second half of the month, given how there was negative media coverage of the Boardwalk,” Cartmell said of November’s gambling revenue. “I think it’s kind of optimistic. The fact that we bounced back as much as we did in the second half of the month is a good sign.”
During the last three weeks ending Nov. 30, gambling revenue fell by about 13 percent compared to the same three weeks of November 2011, the division’s figures showed. But in the two weeks of October and November ending Nov. 9, the market plummeted 63 percent. Those two weeks included not only the casino shutdown for Hurricane Sandy, but another severe storm that buffeted the Mid-Atlantic region Nov. 7, the division said.
The storm-related cancellation of at least nine conventions, conferences, trade shows and fairs also cut into Atlantic City’s visitation. Among them were the New Jersey Education Association conference and the New Jersey League of Municipalities convention. The division also reported that at least 15 concerts and other entertainment events were canceled in November.
“Thus, the impact of Hurricane Sandy was not limited to the days the casinos were closed, but for most of the month of November,” the division said in a statement.
Hurricane woes are the latest blow for a market struggling with a fragile economy and competition from casinos in surrounding states. Since peaking at $5.2 billion in 2006, Atlantic City gambling revenue has declined six years in a row. Last year, the industry grossed $3.3 billion. For the first 11 months of 2012, gambling revenue has declined 8 percent, now standing at $2.8 billion.
Contact Donald Wittkowski: