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Many positive signs in Atlantic City casino market

ATLANTIC CITY — The state of the resort’s casino industry is healthy, experts say, despite two seemingly contradictory reports released last week from state regulators.

These reports showed monthly gaming revenue continued to increase significantly while annual gross operating profits declined.

However, those same experts are expressing cautious optimism for what the future of the industry may hold. Competition between the resort’s nine casinos properties has led to increased spending on the amenities, such as sports books and increased hires, as a way to attract people to their property, experts said.

Anthony Marino, a local analyst who has been studying the market for several decades, said Atlantic City is healthy, for the moment.

“But, the numbers indicate it will be increasingly challenged by fierce internal competition and from the increasing competition that will be more and more apparent from (neighboring gaming jurisdictions),” he said.

In addition to higher gaming revenue, the resort’s casinos also reported growth in areas of hotel occupancy, average room rates, third-party business sales, food and beverage, entertainment and taxes collected in 2018.

But the increased expenses required to compete in an expanded market resulted in an overall decrease of industry profitability.

“Atlantic City is a complex and multifaceted destination with countless variables, most pointing toward overall growth and positive change,” said Rummy Pandit, executive director of the Lloyd D. Levenson Institute of Gaming, Hospitality & Tourism at Stockton University. “2019 revenues and (gross operating profit) will be instrumental in providing a clearer understanding of trajectory and success for the destination.”

The introduction of two new properties — Hard Rock Hotel & Casino Atlantic City and Ocean Casino Resort — last summer contributed to expected growth in total gaming revenue in March, as it has done every month since June.

At the same time, the competition among the resort’s nine properties to attract customers chipped away at the industry’s bottom line.

According to the monthly report released by the state Division of Gaming Enforcement, total gaming revenue was up 25.3% in March compared with the same time last year. Gross operating profit, widely considered a measure of profitability for the industry, was down 15.4% for 2018 compared with the prior year.

Marino said the apparent contradiction actually makes sense when the entirety of the market is considered.

Gaming revenue should be up, he said, because the monthly figures are presently comparing a market with nine casinos and sports betting to a time last year when only seven properties were open sans the additional gaming amenity.

The expectation is that the trend will continue until July, when apples-to-apples comparisons can be made.

Meanwhile, the supply of everything from casino games to restaurants to hotel rooms all increased when Hard Rock and Ocean opened. But the demand “didn’t increase nearly enough to compensate for the increase in supply,” Marino said.

“Consequently, profits were squeezed as the two new casinos tried to establish themselves by spending a lot of money on marketing and giveaways, while many of the seven preexisting casinos did the same thing,” he said.

Bob Ambrose, an industry consultant and adjunct professor of casino management at Fairleigh Dickinson University, said there are more positive signs than not nearly one year into an expanded Atlantic City gaming market.

“We are showing some stabilization and consistency in the growth,” he said. “It’s not going to change overnight. ... I’d rather see slow, steady growth like we’ve had this past year than spiking up and down, because that shows an unstable market.”

Wildwood, OC boardwalk amusements parks ready for opening day

WILDWOOD — As if haunted, the twirling carts of the Wild Whizzer ride at Morey’s Mariner’s Pier glided along the tracks Thursday with no one in them, for four silent hours.

In just a few days, a line of excited kids will be at the ride’s gate, a sign of the shore season coming to life once again.

But for now, ride supervisor Brooke Suydam, 22, of Sewell, in Gloucester County, was testing the amusement, ensuring it was ready for vacationers in the coming months.

“You’re just making sure everything sounds right,” Suydam said. “They sat all winter long, so it’s making sure it’s getting its time in running.”

Workers at amusement parks all along the shore spent last week testing, scrubbing, stocking, fixing and painting — all to have the magic of the experience be the same on opening day as it was when boardwalk-goers left it last year.

“This process starts the day after we close,” said Maggie Warner, Morey’s public relations director. “We are a full, year-round operation, so the work never stops.”

GALLERY: Boardwalk amusements parks get ready for opening day

Workers at Morey’s, which is celebrating its 50th anniversary this summer, can be seen on the pier over the winter doing upkeep work. For example, water park manager Kevin Ebner said, everything on the pier is on an annual painting schedule because of the corrosive effects of the salt air.

“It gives that revived look to it,” said Ebner, 27, of Wildwood. “Keeps it fresh every year.”

There were also clear signs of last-minute preparations Thursday. Maintenance men in John Deere utility vehicles bumped along the boards. Gigantic bags of candy sat unloaded at game booths, ready to be won. Twine was strung to hold the canopy over tables beside Taco Joint, and the lights that frame the arching Morey’s Piers sign were already incandescent.

Cold wind whipped loudly off the Atlantic Ocean, the Boardwalk still shaking off the dormancy of winter. But, like the rest of the amusements, game booths were no longer shuttered, and workers made maintenance and appearance tweaks inside them.

“We want to make sure that everything is clean, because it sits all winter so all that dust, all that sand, gets inside,” said Anthony Sinnerard, 34, of Wildwood, a games manager who oversees as many as 70 employees across two piers. “After we get them fully cleaned, we go in and display them with all of our stuffed animals, … just try to get them to look 100% for our guests.”

A similar process was underway Thursday at Gillian’s Wonderland Pier in Ocean City. Painting of the facade was complete, to make way for the installation of a new sign, Director of Marketing and Sales Robert Kramer said. A new pizza shop and the indoor rides were “up and operational,” he said, and a majority of outdoor rides would follow suit Easter weekend.

“If the weather is good and plays nice, we’re expecting good (turnout),” Kramer said.

Atlantic City’s Steel Pier had 11 rides, plus food and games, open for the first weekend in April, said owner and President Anthony Catanoso. The team expects everything will be up and running by Easter weekend. Catanoso said it’s “exciting and rewarding” to see everything out of storage and in place, but the work never stopped.

“We’re never dormant. The winter is a tough push because we take everything down and bring it to our warehouse, refurbish it,” Catanoso said. “By the time they’re done, it’s time to put it back up.”

In Wildwood, the 135 year-round employees and roughly 1,500 seasonal employees at Morey’s Piers are just as ready for the prep to be finished, and the summer to start.

“It’s a lot of fun. I really love this job in the summertime,” Suydam said. “It’s excitement from going from wintertime, not really having this, to being able to come here and meet new people.”

The amusements are open on weekends only until mid-June, Warner said. Among the new additions for guests to look forward to is a long-range basketball shot game, a “strong man challenge” where confident guests can try to hang from a bar for two minutes to win a big plush, and a roller coaster, the Runaway Tram, opening on Morey’s Surfside Pier.

“As it gets closer to opening day, people are excited. We’re ready to open,” said Warner. “We’ve been working hard all winter, so now we’re gonna kind of put everything together and see it in full swing.”

Atlantic County paying almost $1 million of Atlantic City's landfill tipping fees

NORTHFIELD — The savings provided to Atlantic City by the county as part of a casino payment-in-lieu-of-taxes lawsuit settlement goes beyond providing services at a reduced cost.

It also includes paying almost $955,300 a year in “tipping” fees, the fees landfills charge for accepting solid waste, for the resort, according to a resolution recently passed by the county freeholders.

Atlantic County Executive Dennis Levinson said the payment of some of the city’s tipping fees was agreed to in the 2018 settlement of a lawsuit the county brought to get a greater share of PILOT payments than the 10.4% the state wanted the county to get.

“They wanted $2 million, but that wasn’t going to happen,” said Levinson.

Atlantic City Mayor Frank Gilliam’s office said he would provide a comment on the tipping fees Monday, including information on how much the city pays for tipping fees in total. But his office had not provided the information by the end of the business day.

Levinson said the city’s total tipping fees are far more than what the county will pay.

The PILOT was intended to help stabilize Atlantic City’s tax base after several casino property tax appeals sent it plunging.

The amounts the casinos pay as a group are set each year based on their financial success. It started out in 2017 as a $120 million payment but went up to $130 million in 2018 as a result of better financial performance.

The settlement allowed the county to receive 13.5% of casino PILOT payments from 2019 through 2024, and slightly lower amounts in other years.

Levinson estimated the settlement allows the county to get about $37.2 million more from the PILOT over its 10-year lifespan than it would have if the county share stayed at 10.4 percent.

The county also agreed to increase shared-services savings to Atlantic City to $2.1 million from about $1.1 million.

The $1.1 million in savings came from the county running the city’s Meals on Wheels program, providing portions of its public health services, and running its nutrition sites and a transportation program for seniors, the disabled and veterans.

The services are provided for an about $1 million fee, about $1 million less than the city had been budgeting to provide them.

The lawsuit challenged the constitutionality of the PILOT law. The county sued after then Gov. Chris Christie promised the county would receive 13.5 percent, then announced the amount would be 10.4 percent.

Atlantic City's historic Formica Bros. Bakery files Chapter 7 bankruptcy

ATLANTIC CITY — Formica Bros. Bakery, an economic and culinary staple about to celebrate its 100th birthday in the resort, has filed for Chapter 7 bankruptcy because of difficult economic conditions and two severe workplace injuries that resulted in amputations and lawsuits.

But the famous “Atlantic City bread” made by three generations of the Formica family will still be made, and almost all of the employees of the bakery — 67 of 71 — will keep their jobs, under a lease agreement that keeps the name and recipe alive, said longtime owner Frank Formica.

“We are just getting through all this — getting everything straight, keeping employees and customers,” said Pat McKenna, of Linwood, the new holder of the leases. And then, he said, he will celebrate the bakery’s 100th year, as it was started in 1919.

GALLERY: A look back at Formica's Bakery

McKenna moved his food manufacturing company, A Taste of Italy, to Egg Harbor City two years ago from the Marlton area, he said. He also purchased Rastelli’s Seafood in Egg Harbor City.

Formica, a Republican Atlantic County freeholder-at-large, said the bakery and an affiliated company Baker Boys LLC of Pleasantville, both filed for Chapter 7. But before doing so, he leased their assets — including the right to keep using the name Formica — to an experienced food manufacturer who will keep the same employees working with no interruption in production or services, Formica said.

“I am out of ownership and cannot enjoy the profits of the business,” said Formica. “The only thing I may be able to do is be a consultant to the business under a managed fee.”

All assets from the leases will be distributed by U.S. Bankruptcy Court, Formica said.

Formica, re-elected last year in a surprisingly close election, announced he would run for state Assembly late last year but recently dropped out of the race, citing pending lawsuits related to the workplace accidents.

Formica said they were the only serious accidents in 98 years of history at the bakery, and that both employees had done things they were trained not to do — such as put their hands into equipment that hadn’t been properly shut down. But he felt they and the lawsuits could be used against the Republicans in this fall’s elections.

Three Atlantic County Democrats who ran unsuccessfully for freeholder seats last year — Celeste Fernandez, Maureen Leidy and Barbara Butterhof-Reault — criticized Formica and Freeholder James Bertino, the bakery manager, for the incidents.

The first workplace accident occurred Nov. 30, 2015, when employee Francis Carpinelli was using a bread-making machine that cuts dough into small, round shapes.

The machine did not come with a device to clean out the remnants of dough, so Carpinelli stuck his hand inside the machine to clean out the leftover dough and had it crushed, which led to the amputation of four fingers and part of his thumb, according to the lawsuit.

The second incident occurred on May 3, 2016.

Employee Dianna Trujillo, of Pleasantville, was in charge of removing dough from a mobile conveyor and putting it into pans.

The dough came out on two conveyors that were not attached to each other, according to the lawsuit. It would sometimes fall between the two conveyors, which then required employees to reach underneath and catch it.

Trujillo reached under the conveyor to grab dough that had fallen through and got her arm caught in a chain and sprocket. As a result of the incident, her arm was amputated below her elbow, according to the lawsuit.

Lawyers for the two did not respond to requests for information Monday about how the filing will affect their cases.

Formica said the cost of defending the lawsuits, along with increased insurance costs and an ongoing tough business climate, led to the bankruptcy.

“This area has never become healthy or whole,” after the recession of 2008, Hurricane Sandy in 2012 and the closing of five casinos in and around 2014, he said.

“I’m from the old school, we were persistent trying to make it work,” said Formica, “and we were definitely moving in the right direction.”

But he said he couldn’t afford to defend the two lawsuits, since they were filed in a way that put them outside of insurance coverage.

By filing Chapter 7, the lawsuits should be discharged, Formica said.

McKenna said he appreciates the uniqueness of Formica’s bread and will keep making it the same way.

“If it’s not made in Atlantic City, it’s not ‘Atlantic City bread’,” said McKenna. “I’m told it’s the water.”