ATLANTIC CITY — Casinos nationwide are slowly, but steadily recovering from the recession, although Atlantic City remains mired in a revenue slump as competition increases in the Northeast, a study shows.
Gambling revenue at commercial casinos rose 3 percent overall, to $35.64 billion, in 2011, the second straight year of growth in the improving economy, the American Gaming Association said Wednesday in its annual State of the States report.
Most of the 22 states where there are commercial casinos — not including Indian-owned casinos — have begun a post-recession rebound, but one notable exception is New Jersey. Atlantic City suffered the biggest revenue decline of any casino market last year and has been falling since 2007, according to the AGA report.
Casinos in Pennsylvania, New York and Maryland, by comparison, got stronger, driving up revenue in each of those states while Atlantic City’s gambling pot shrank 7 percent last year to $3.3 billion.
In another key category, New Jersey tax revenue generated by Atlantic City’s casino industry fell in 2011, down 9 percent, to $277.6 million. New Jersey had the biggest decline in casino tax revenue among the states included in the AGA report. Atlantic City’s casino work force also got smaller in 2011, dropping 4 percent to 32,823 jobs.
Frank J. Fahrenkopf Jr., the AGA’s president and chief executive officer, said the April 2 opening of the $2.4 billion Revel megaresort gives Atlantic City renewed hope for a comeback.
“So far, we’ve heard rave reviews,” Fahrenkopf said of Revel.
Fahrenkopf, however, was surprised to learn that Revel generated only $13.4 million in gambling revenue in its first month of operation. That figure is near the bottom for Atlantic City’s 12 casinos.
Fahrenkopf blamed an overall combination of fierce competition from surrounding states and bad timing for Atlantic City’s downturn. He noted that the city’s run of “bad luck” accelerated during the recession, when the economic crisis killed a proposed multibillion-dollar building boom.
“The economic downturn of 2008 just stopped all of that in its tracks,” he said.
State Sen. Jim Whelan, D-Atlantic, said Atlantic City must add new attractions to become a more diverse tourist destination. He pointed to Revel’s opening and the $150 million renovation of the Golden Nugget Atlantic City as steps in that direction. Whelan, a former Atlantic City mayor, also said the city must continue with efforts to clean up blight and make it safer for tourists and residents.
“The entertainment, the gambling, the shopping, the dining — the whole package of why people come to the city — all of that is needed. We also need to clean up the streets and make it safer,” Whelan said.
One key component of the city’s hoped-for turnaround is a $20 million tourism and publicity campaign financed by the casinos through their marketing coalition, Atlantic City Alliance. Joe Lupo, senior vice president of operations for Borgata Hotel Casino & Spa, said the alliance has already begun working with government agencies on a public-private partnership to boost the city’s visitation.
“There are many things that are already in place and moving forward,” Lupo said. “I think you’ll need some time to see how all the pieces fit together and see a more positive impact from the numbers.”
In addition to Revel’s opening and the renovation of the Golden Nugget, Lupo noted that Borgata is finishing up a $50 million makeover of its 2,000-room hotel tower. All of those capital improvements are “great signs” that the market is poised for a recovery, he said
In the past few months, archrival Pennsylvania has begun to overtake Atlantic City as the nation’s second-largest casino market. AGA classifies Pennsylvania as more of a series of independent markets spread out across the entire state, with Philadelphia being one of them.
“If you’re in Philadelphia and want to play the slots, you don’t have to drive an hour down the parkway to get to Atlantic City,” Fahrenkopf said of how Pennsylvania’s gamblers are now staying close to home.
Pennsylvania’s casinos grossed $3 billion in gambling revenue in 2011, a 21 percent increase over 2010. Moreover, Pennsylvania’s casino industry generated nearly $1.5 billion in state tax revenue last year, up 10 percent, benefiting from a higher tax rate than New Jersey’s.
“I think the future of Pennsylvania is great,” Fahrenkopf said.
Las Vegas, home to the glitzy Strip casinos, remains the nation’s largest gambling market, pulling in more than $6 billion in gambling revenue last year.
AGA indicated that it is increasingly important for the casino industry to create more nongambling attractions to complement the slot machines and table games.
Polling results conducted by the AGA showed that 76 percent of the people who visited casinos in 2011 dined in a casino restaurant, 62 percent saw live entertainment and 46 percent went shopping at the casinos. More than one-quarter of the casino patrons said they rarely or never gamble when they visit.
“They’re filling hotel rooms, they’re renting cars, they’re going to restaurants,” Fahrenkopf said. “I think that is the model we’re starting to see around the world.”
Nearly 60 million people, or about 27 percent of the nation’s adult population, visited a casino in 2011, making only the lottery a more popular form of gambling. The report also said that 81 percent of those polled view casino gambling as acceptable for themselves or others.
Gamblers enjoy playing the slot machines and video poker more than any other games. Blackjack is next in popularity, followed by poker and then craps and roulette. About half of the casino patrons have a gambling budget of less than $100, while another 23 percent limit themselves to under $200, the report found.
A special section of the AGA report featured a poll of elected officials and civic leaders in the country’s casino markets. According to the results, community leaders believe casinos have delivered on their promises of jobs, economic development and tax revenue.
By an 83 percent majority, community leaders said that the overall impact of casinos in their area has been positive. More than three-quarters of them also said casinos have done more to help than hurt other local businesses, the report said.
Perhaps most telling, 76 percent of the community leaders said they would vote in favor of bringing casinos to their towns and cities if given the chance to go back and cast the deciding vote again.
Whelan, who was not one of the elected officials surveyed by the AGA, argued that casinos have been overwhelmingly positive for Atlantic City and New Jersey.
“I think Atlantic City would be dead without casinos,” he said. “It hasn’t been perfect — it never is — but Atlantic City and New Jersey have benefited from casinos coming here. The fact is, we are now a victim of our own success. We did such a good job that everyone else copied us.”
Contact Donald Wittkowski:
609-272-7258
