My Atlantic City history column in March’s Casino Connection has nothing to do with gambling. Instead, I look briefly at the career of an artist who was born in Atlantic City, Jacob Lawrence:

Dozens of notable figures have played a part in Atlantic City’s history, from Thomas Edison and Diamond Jim Brady to Jay-Z and Donald Trump. Yet few people know that one of the most respected American artists of the 20th century was born here.Jacob Armistead Lawrence’s family was part of the “Great Migration” during and after World War I, in which thousands of black Southerners moved North in search of better lives, far from Jim Crow. The Lawrence family came to Atlantic City, where Jacob was born on September 7, 1917.

via Jacob’s Ladder | Casino Connection Atlantic City.

I enjoy the chance to write about non-gaming/hospitality topics, particular for the Atlantic City column, and have a few more planned in the near future. Of course, next month I’m tackling a little Trump Taj Mahal history in honor of the 20th anniversary of its opening. It’s hard to believe it’s been that long. I remember when the New Delhi Deli was the hot new restaurant in town–it was replaced by the Hard Rock a long time ago.

Lawrence was an interesting subject because he didn’t live in the city for long, but was clearly the kind of artist who picked up a great deal from his surroundings, so his early influences might have had an important role in shaping his work.

This has been up for a while, but I haven’t linked it yet and, with the news that Donald Trump and Carl Icahn are dueling over Trump casino empire, it’s relatively timely: my piece on the early history of Trump Plaza in Casino Connection:

Trump was leery of the Casino Control Commission. It had forced Caesars World’s founders Clifford and Stuart Perlman to step down before giving Caesars Boardwalk Regency a license. It had denied a license to Hilton after the company had already built its casino. And it caused so many problems for Hugh Hefner that the Playboy founder torpedoed the Atlantis casino.

Trump refused to turn so much as a shovel of dirt until commissioners voted yea or nay on his license. In March 1982, he got his wish—and his license—in hearings that lasted two hours (by contrast, hearings for the Atlantis dragged out for two months).

via Plaza Suite: History of Trump Plaza | Plaza Suite: History of Trump Plaza | Casino Connection Atlantic City.

I quoted that bit because it seems relevant, with MGM Mirage leaving AC over regulatory issues.

My piece in the Las Vegas Business Press about the beginning of the end in Atlantic City is out:

Historians have taken the date 476 A.D. and the deposition of Romulus Augustus, the last Roman emperor, as the “official” date of the fall of the Roman Empire, even though at the time most Western Europeans were too preoccupied with daily survival to take much notice of events in the far-off capital.

When historians look back at the history of casino gaming in Atlantic City, they may decide that 2010 marks the beginning of the end of that city's reign as one of the country's leading gaming destinations, and they might focus on a single event: The decision by MGM Mirage to abandon its holdings in the city after the New Jersey Division of Gaming Enforcement found Pansy Ho, the company's partner in its MGM Grand Macau casino, “unsuitable.”

via Las Vegas Business Press :: David G. Schwartz : The beginning of the end for Atlantic City?.

I don’t think this is hyperbole. The revenue trends are showing a decline that started slightly before the recession that is more due to competition than the economic slowdown, although the recession hasn’t helped. There are real problems in Atlantic City.

Are there solutions? Yes, and they go beyond making Pacific Avenue a one-way street. As I see it, the city has to be reinvented to appeal to two groups: investors, who will buy or build new casinos and attractions, and visitors, who will fill them. These groups aren’t mutually exclusive, but they require different approaches. The average gambler doesn’t really care about how many levels of scrutiny casino vendors go through before they are licensed, but this sort of thing makes a difference behind the scenes.

It’s not impossible. The city’s been through worse, and the right forward-thinking people can help get it on the right track. The time for action, however, is now. If AC just continues to coast for a few years, it may be too late, at least for this generation.

Checking the headlines in the AC Press as of 2PM Pacific time, I couldn’t find a word about the seemingly-momentous decision of MGM Mirage to sell its stake in Borgata. This is curious, since you would think that having one of the biggest casino companies in the world, which at one point had billions of dollars in the development pipeline in AC, officially announce it’s selling out would be at least DEFCON 2-level news.

But there is this separate yet equally compelling story about an imminent state monitoring of the city:

State intervention in Atlantic City government could become a reality if the city doesn’t “get its act together” within two to three months, a state senator said Monday.State Sen. Kevin O’Toole, R-Bergen, Passaic, Essex, said he would be willing to push for a state monitor with veto power over City Council minutes if the local government doesnt return to the Senate State Government, Wagering, Tourism & Historic Preservation Committee with a good-faith response to a recent state audit report.State Comptroller Matthew Boxer answered questions and described some of the findings in his offices report on Atlantic City’s fiscal management, which outlined more than $23 million in waste and inefficiency .

via Atlantic City warned to “get its act together” or face state intervention – pressofAtlanticCity.com : Latest News.

This isn’t directly linked to the Division of Gaming Enforcement’s decision re: Pansy Ho, but it shows the heavy hand that state government has in the city itself, not just its biggest industry. And with $23 million in tax money apparently being flushed down the toilet, it’s hard to say that there’s no justification there.

The irony is that, if Pansy Ho had been suitable, MGM Mirage might have found itself doing business in two “Special Administrative Regions.”

I’d guess that, on the strength of the $60 million a year MGM Mirage gets from the Borgata and the value of the real estate the company controls (which I assume would be part of the sale), the company might fetch something $200-$500 million. I haven’t run any numbers to confirm this; that’s just my first impression based on about 6X EBITDA, which is right in the middle of those numbers, with some degree of flexibility for the value of the real estate (on the high side) and the depressed state of the general market (on the low side).

The problem, of course, is finding someone willing to pay big bucks for an asset (albeit the top-performing one) in a regressing market, particularly when the seller is very publicly identified as “motivated.”

Most people are assuming that Boyd will be the suitor, which makes sense, though this wouldn’t necessarily be a bad buy for an equity firm if they went into it with realistic expectations.

It likely wouldn’t be anyone else already in the market, since Harrah’s is already far too exposed in AC, Trump has its hands full with its existing casinos (though 1/2 of Borgata would actually be better than 100% of the Marina right now), Colony Capital has lost one casino to its lenders already, and Carl Icahn’s plate is presumably full with turning around Tropicana Entertainment and the Fontainebleau.

Anyone not in the market would have to do some serious soul-searching about their licensing, since the state has made it clear that they consider no company too big to show the door to. Even if Borgata can retain its market share (which might be difficult when Revel opens), it’s still piece, though a big one, of a nonetheless shrinking pie.

According to a WSJ report, MGM Mirage has decided to sell its interest in the Borgata and presumably close the door on any future developments in Atlantic City:

For years, New Jersey regulators have raised concerns about the suitability of casino company MGM Mirage's business partner in China. Now, MGM Mirage has an answer: cash out of Atlantic City.The company plans to divest its 50% stake in the Borgata casino resort, a person with knowledge of the negotiations said last week. Although it has been scouting for buyers it hasn't come to a deal, according to two people with knowledge of the talks.MGM Mirage hopes that its plan to sell its Atlantic City interests will convince New Jersey regulators to agree to curtail their regulatory oversight of the company. Any additional scrutiny has the potential to cause problems with MGM Mirage's business elsewhere.MGM Mirage disclosed last year that New Jersey's Division of Gaming Enforcement had issued a confidential report saying the company should disassociate from Pansy Ho, MGM Mirage's joint venture partner in Macau. It labeled her an “unsuitable” business partner.

via MGM Mirage Prepares to Sell Stake in Borgata – WSJ.com.

Here are some numbers. According to the latest-available financial report, Borgata was on track to show a net income of about $120 million in 2009. MGM Mirage gets half of that. In this economy, adding $60 million to your bottom line is nothing to sneeze at. There are expenses involved–particularly, as we see, regulatory-related expenses. And the threat of drawn-out litigation makes that $60 million a year look less and less attractive.

According to the 2008 MGM Mirage Annual Report, in that year the company spent $24 million on its MGM Grand Atlantic City development before pulling the plug due to the worsening economy. Now that we’ve all seen the city’s revenues fall back to 1997 numbers, it would be hard to argue that this was a bad decision. Unless something dramatic happens (that is, unless casino operators make something dramatic happen), Atlantic City is clearly a declining market.

What about Macau? According to MGM Mirage’s investor relations, the company earned $24 million in revenue from MGM Grand Macau in the third quarter of 2009. That pencils out to roughly $96 million for the year.

Which is greater? $60 million or $96 million? The decision seems obvious.

There is also the fact that Macau is the world’s fastest-growing casino market, and Atlantic City has, as I said before, gone back to 1997 and, with the imminent arrival of Pennsylvania table games, is poised to fall even further.

Even as an Atlantic City native, I’ve got to admit that MGM’s management has few options here. Clearly the most responsible decision for the company’s health is to stay in Macau.

To make a long story short, Atlantic City needs MGM Mirage far more than MGM Mirage needs Atlantic City at this point. Should this make a difference to the integrity of the licensing and enforcement process? Absolutely not. But there’s something to be said for over-zealousness. Past operators chased from Atlantic City by regulatory overkill–Hugh Hefner and Hilton Hotels are the most prominent–continued to do business in other states with not even a whisper of impropriety. Hilton was even invited back.

What does this all mean? New Jersey’s regulators aren’t doing the state any favors by throwing the book at MGM Mirage. The only beneficiaries might be the existing operators, who will have one less rival to face (if MGM decided to go ahead with their AC project), and even that’s debatable, since a project of the scale that MGM had proposed would have probably brought more people to town. This looks like a lose/lose situation.

A few more thoughts about Atlantic City, culled from a few

Advisers to Gov. Chris Christie have called for casino regulatory reform, a public-private Atlantic City marketing initiative and possible state intervention in city government as ways to save New Jersey’s casino industry from competition and its “failed” business model.

On Friday, Christie released 19 transition team reports containing dozens of recommendations for reducing and reforming state government. The detailed proposals include making Atlantic and Pacific avenues in Atlantic City one-way streets, accelerating Atlantic City International Airport expansion and building an Atlantic City Expressway interchange for the airport and a new aviation research facility.

Another idea mentioned, although not endorsed, is to privatize the state lottery and have it work with New Jersey racetracks, which have sought to install video-lottery terminals, which operate like slot machines. The report calls for consolidating New Jersey’s declining racing operations.

In a report critical of Atlantic City government’s handling of finances, transition team members called for an unexplained “state presence” in city government to ensure fiscal efficiency.

via Christie advisers call for casino regulatory reform, marketing of Atlantic City – pressofAtlanticCity.com : Today’s Top Headlines.

I believe that proposals to make Pacific Avenue one-way have been floating around since before World War II. I’ve come across them going back decades. These infrastructure issues don’t address the main problem, which is declining appeal for the city as a whole.

The report boils AC’s decline down to four issues:
1) Increased competition in “Convenience Gaming” in the 5 State mid-Atlantic region.
From 1990 to 2009, Atlantic City has gone from a “monopoly”, to a scattered
competitive marketplace of 26 existing alternatives of VLT/Slots with close to a
doubling of the supply of gaming product in recent years. Atlantic City remains the
only alternative in New Jersey, but has been surrounded by a “picket fence” of
competitive interests in surrounding states; the vast majority of which are
principally stand alone warehouses of slot machines with little non-gaming product
(no hotels and little in the way of night life, retail and food offerings). The newest
generation of increased Atlantic City competition through convenience gaming is
New York’s Aqueduct Racetrack pending 4,500 VLT facility. This needs to be
monitored.
2) Impact of the “Great Recession” on customer’s spending.
3) Partial Smoking Ban has material revenue impact (est. 10% decline).
4) Perception of Atlantic City as unsafe and unclean arising from a failure to invest in
the areas surrounding the casinos, and local government’s inability to manage this
current reality, in spite of unparalleled tax revenue per capita on a statewide peer
basis.

DRAFT TRANSITION REPORT
NEW JERSEY GAMING/SPORTS AND ENTERTAINMENT COMMITTEE

Here’s my take:
1. Competition: It’s not going away, and it was inevitable. National casino expansion really took off circa 1990, so the city’s casinos have had 20 years to prepare. One way to fight it, as this report suggests, is to follow the Las Vegas model and add unique attractions. That’s not going to be perfect–it increases dependence on fly-in and high-spending customers, who are more sensitive to economic fluctuations than moderate-spending day-trippers–but it’s a start. If you doubt that, compare the 20-year trends for Las Vegas and Reno.

2. Recession: Not much you could have done about this.

3. Smoking ban: Even a complete ban would lead to a temporary decline, but Delaware’s history suggests that the numbers will rebound within 3-4 years. If the current anti-smoking trend continues, I wouldn’t be surprised to see most American casinos limiting smoking within ten years.

4. Perception: This is an area where the city’s casinos can make a difference. The city needs a message, and needs to stick with it. I don’t think that people come to Las Vegas because it has a reputation as a particularly clean or safe place; most big cities, in fact, have issues with crime and blight. People come to Las Vegas to have fun. Can you have fun in Atlantic City? I think so, and potential visitors need to find that out.

The best thing for the people trying to restore Atlantic City to do at this point would be to take a long look at what Las Vegas has done right. Once, Las Vegas was primarily a gambling destination, with a heavy reliance on Southern California. In the past ten years, Indian casinos have cut into the Southern California market. But even with the recession, Las Vegas is in a better place now that it was in 2000–which is more than Atlantic City can say at this point. Why?

Las Vegas was able to transition into areas as disparate as business meetings and nightlife: Atlantic City should make investments in these, particularly in the meetings market, since that will boost mid-week occupancy and keep hotels full. A combination of business travelers spending more on f&b, lodging, and entertainment, supplemented by what remains of the day-tripper market, can give a mid-week base for both non-gaming and gaming revenues. Then on the weekend resorts can focus on attracting higher-end destination gamblers and travelers. The convention room rates will provide a base that will let the resorts offer better-class rooms that can make money seven days a week, not just two.

It won’t be easy–there are many negative perceptions to overcome, as well as some serious renovation and construction work–but at least it will give the city a chance.

There’s another negative milestone for Atlantic City slots: in December, they got less play than slots in Pennsylvania. From the AC Press:

Gamblers are putting more money into slot machines in Pennsylvania than they are in Atlantic City.The Gaming Industry Observer says December was the first month ever that slot-machine handle in Pennsylvania surpassed Atlantic City's.

Editor Joseph Weinert calls it a milestone that is a result of declining slots play in New Jersey and rising slots play in Pennsylvania.The difference was $2.1 billion in Pennsylvania to about $2 billion in New Jersey. On top of that, Weinert is forecasting an increase in Pennsylvania's slots revenue in 2010 and a drop in Atlantic City's.

However, Atlantic City casinos brought in more money total because of table games revenue there. Pennsylvania just legalized table games earlier this month.

via Pennsylvania slots revenue surpasses Atlantic City for first time – pressofAtlanticCity.com : Latest News.

There were some interesting comments on the article, including one about parking that says pretty much what I’ve been saying for a while, namely that Atlantic City casinos should not charge for parking. If you are driving to Atlantic City from the Philadelphia area, here are the tolls you’ll pay: $4 to get back into Philly, $6 roundtrip at the Egg Harbor toll plaza, and $1.50 roundtrip at the Pleasantville toll plaza. That’s $11.50, just to get to town. Factor in gas (probably 5-6 gallons, roundtrip, at $3 per) for another $15 or so. Then add a parking charge that can be as high as $25 if there’s a convention in town. We’ve got $27.50 total driving costs before the parking, and then another $5 to $25 on top of that. At a minimum, that’s $32.50 or so that the patron has spent to get to your casino.

Why should they pay more and spend more time getting to Atlantic City when they can get to a PA casino quicker? Even if they have fewer comps, they’ve just saved themselves the cost of a meal by cutting out those driving costs.

If I was running an AC casino’s marketing department, I’d seriously consider giving anyone with a PA driver’s license $30 in freeplay just for walking through the door and comp their parking. That might make it worth their while to make the drive. Sure, it’s a big giveaway, but at this point it should be clear that it’s necessary.

PA slot casinos have an effective tax rate of 55%. AC casinos have an effective tax rate of about 9%. Shouldn’t they be able to offer a better experience to players if they invest part of the 46 cents on the dollar more that they keep back into the facility or into marketing?

The Atlantic City gaming numbers are in, and 2009 was definitely not pretty. From the AC Press:

Casino revenue plunged for the third straight year in 2009, falling below $4 billion for the first time since 1997 as the soft economy and competition from neighboring slot parlors continue to erode the Atlantic City market.

Year-end figures released today by the New Jersey Casino Control Commission show that revenue from slot machines and table games declined 9.8 percent in December and fell 13.2 percent for the entire year for total winnings of $3.9 billion.

Analysts predict there will be no recovery in 2010 because of the persistently weak economy and even fiercer competition from the Pennsylvania and Delaware slot parlors. Both states will be adding Atlantic City-style table games this year in a major expansion of their gambling industry.

Atlantic City has been on the decline since peaking at $5.22 billion in revenue in 2006. Revenue slipped 5.7 percent to $4.92 billion in 2007 and was down 7.6 percent to $4.55 billion in 2008.

In contrast to Atlantic City, Pennsylvanias gaming market posted a 28.1 percent jump in December slot revenue, thanks to the grand opening of the Sands Casino Resort in Bethlehem and the Rivers Casino in Pittsburgh in 2009.

via Atlatnic City casino revenue off 13%, 3rd straight year of decline. – pressofAtlanticCity.com : Latest News.

You can check the Atlantic City casino stats page to verify that, indeed, Atlantic City has retreated to 1997 revenue levels.

Let me put that in a different way. The last time casinos made this much (or little), Bally’s Wild Wild West was the latest and greatest thing on the Boardwalk. Twelve years of growth–factoring in everything from the opening of the Borgata to expansions at the Taj, Tropicana, and Harrah’s–has been wiped out.

I’ve always been opposed to talk of a “death spiral” in my hometown, but it should be clear at this stage that the city needs some bold, dramatic action to turn things around.

If you want to read more about Atlantic City, check out Part II of my brief history of the Tropicana in the month’s Casino Connection. Enjoy.

Great news for Pennsylvanians who like to play table games, bad news for Atlantic City, as Pennsylvania has, to no one’s surprise, approved table gaming. Here’s the reaction from the AC Press:

Pennsylvania’s slot parlors won’t stop at table games as they prepare to evolve into Atlantic City-style resort casinos in a fierce battle with New Jersey for gambling customers.Blackjack, craps, poker and other games will help generate revenue for construction of new hotel towers, retail shops, restaurants, spas and nightclubs — which in turn will broaden the appeal of the Pennsylvania gaming market, casino executives say.

Previously, Atlantic City casino executives had mocked Pennsylvania’s slots-only gaming parlors as “one dimensional.”Much is at stake in the competition between Atlantic City and Pennsylvania. Table games generated $1.4 billion in revenue in 2008, about 30 percent of Atlantic City’s overall take of $4.5 billion. The remaining 70 percent, or $3.1 billion, came from slot machines.

Atlantic City’s revenue figures for 2009 will be announced Monday, though Atlantic City already is hurting from competition from Pennsylvania for slot customers and the weak economy. Through the first 11 months of 2009, the city’s gaming revenue fell 13.5 percent, to nearly $3.7 billion.

via Tables turn in Pennsylvania’s favor: Casinos hope to attract more players with better games – pressofAtlanticCity.com : Atlantic City.

You can find more details of the bill at Gaming Today. Basically, racinos and slot parlors will be able to add 250 games (for reference, the standard Strip casino has 80-100) and the resort casinos can have 50 tables, but can add more slot machines.

Atlantic City has until the summer, or maybe the fall, before the first cards are dealt. The clock is ticking. Unless the casinos can develop some kind of attraction that the Pennsylvania casinos don’t have, or can somehow deliver a customer experience that would justify the extra hour drive and expressway tolls, they can consider the Pennsylvania market–and maybe parts of New Jersey and New York–lost.

There’s a very real possibility that Atlantic City will become a local gaming hub for New Jersey and a few nostalgic Philadelphians.

For a while in the early 1980s, Atlantic City was out-earning the Las Vegas Strip in gaming revenue and visitation, and was being hailed as the up-and-comer. Then as the Strip pulled ahead, it settled into a position as “the casino capital of the East,” with pretty much everything east of the Mississippi potentially feeding it. Then the spread of Indian and riverboat casinos started cutting into that market–Delaware racinos and Connecticut Indian casinos most remarkably.

In the early 1990s a few innovations–24-hour gambling, poker, and keno were the biggest–gave the city’s casinos something new. In 2003 the opening of the Borgata proved that Vegas-style resorts could work. Still, revenue and visitation numbers have been declining. Here are some figures from UNLV’s Atlantic City casino page:

Visitation
2005 34,924,000
2006 34,534,000
2007 33,300,000
2008 31,813,000
2009 ???

Total Resort Revenues (Gaming+Non-Gaming)

2005 6,264,017,000
2006 6,528,927,000
2007 6,256,038,000
2008 5,839,136,000
2009 ???

Gaming Revenues
Year Total win Slot win Table win
2001 4.3 billion 3.1 billion 1.2 billion
2002 4.2 billion 3.3 billion 1.1 billion
2003 4.5 billion 3.3 billion 1.2 billion
2004 4.8 billion 3.6 billion 1.3 billion
2005 5.0 billion 3.7 billion 1.3 billion
2006 5.2 billion 3.8 billion 1.4 billion
2007 4.9 billion 3.5 billion 1.5 billion
2008 4.5 billion 3.1 billion 1.4 billion
2009 about 4.0 billion? (rough mathematical projection based on 11 months at $3.7 billion)

You’ll notice that visitation has declined since 2005, and total revenues have declined since 2006, which makes this a pre-recession problem.

In the last table, you’ll see that slot machine win has fallen to 2001 levels, offset slightly by an increase since then in table game revenues, which is attributable to the competition from Pennsylvania slots after 2007. Pennsylvania tables will undoubtedly cut into the AC table game win in 2010, so it’s possible that the industry will fall well below 2000-era revenue levels. Nevada, by comparison, is back to 2004/05 gaming revenue levels right now.

At this rate, Atlantic City’s going to end up in the stone age in ten years.

Here’s a holiday update on the status of Pinnacle’s much-ballyhooed Atlantic City project. Remember the billboards? From the AC Press:

The site has become yet another vacant city lot, a prominent symbol of broken promises and the weak economy.Fences line the gravel lot dotted with weeds and a few scattered slabs of old concrete. Local government has no power to change the situation.”They put 3,000 people out of work, they took away valuable ratables and we let it happen,” said Councilman Dennis Mason, head of the council's Planning and Development Committee, of Pinnacle's decision to demolish the Sands. “We just kicked ourselves in the butt again.”The collapse of Pinnacle's bold plans affect more than just the 20-acre property.The 74-year-old city post office across the street has been shuttered since the Sands demolition. It is scheduled to be demolished as part of project to widen Martin Luther King Boulevard, plans made in anticipation of Pinnacle's arrival. Businesses around the site on Pacific Avenue, like Fischer's Flowers and a multicultural store called Wada International Store, have either moved or closed.Other Boardwalk businesses moved out after Pinnacle raised the lease costs on storefronts they now own. They replaced some stores with new tenants, but the facades have been damaged after store signs were torn down and replaced with cost-saving banners.”If you look at that area, it would be fair to compare it to Berlin after the war,” Police Chief John J. Mooney III said. “That whole neighborhood has been decimated by the demolition.”

via Empty Pinnacle site, symbol of broken promises and opportunity for crime – pressofAtlanticCity.com : Today’s Top Headlines.

I always thought that if they had an All-American Exposition that celebrated the unique architectural contributions of different American cities (New York brownstones, Philadelphia rowhouses, etc), Atlantic City would be represented by a vacant lot. I guess it’s ingrained into my mentality, having grown up in post urban-redevelopment Atlantic City, seeing plenty of empty lots all over.

The worst news about this story is that Pinnacle’s bottom line in Atlantic City–even with the costs of maintaining the “hole” thrown in–are better than those of three real casinos with thousands of slot machines and hundreds of hotel rooms. From January 1 to Sept 30, 2009, the Atlantic City Hilton lost nearly $20 million, Resorts and the Tropciana lost about $18 million, and Trump Plaza lost almost $5 million from their operations. So if Pinnacle’s only flushing two or three million a year down the hole in the middle of the Boardwalk, they’re actually coming out ahead, and that’s not even factoring in the costs of building, interest on bonds, and such.

Atlantic City has some new competition, or at least a refurbished version of old competition. From the AC Press:

While the atmosphere of the stylishly named Parx Casino may feature some European or Asian-inspired elegance, the crowd will have a distinctly Philly flavor. When this new $250 million slots parlor opens its doors Friday, it will replace the old Philadelphia Park Casino & Racetrack, better known to its legions of gamblers as Philly Park.Now that Pennsylvania lawmakers are on the verge of giving final approval for table games at the state’s slot parlors, Parx and its counterparts will be an even greater threat to the struggling Atlantic City market, industry officials predict.

“It just gets worse for Atlantic City. I truly believe Atlantic City is permanently disfigured,” said Justin T. Sebastiano, gaming analyst for Morgan Joseph & Co. Inc. “I certainly think table games will hurt Atlantic City.”

“Everyone is going to want to see what the little Philly Park casino has been transformed into,” spokeswoman Carrie Nork Minelli said during a tour of the new facility.Indeed, customers need only look across the parking lot to see the dramatic differences between Philly Park and Parx. Philadelphia Park’s temporary casino was a reincarnation of the warehouse-like horseracing grandstand from the 1970s.

The modernistic Parx represents the next generation of casinos in Pennsylvania’s fledgling gaming industry.Even the old Philly Park has been a formidable competitor for the Atlantic City casinos, about an hour’s drive away in good traffic. Located about 20 miles north of center-city Philadelphia, it is Pennsylvania’s top-grossing slots parlor and has been stealing customers from feeder markets once dominated by Atlantic City.

Parx lacks the soaring hotel towers that are a staple of the Atlantic City gaming resorts. But the casino floor itself is reminiscent of the glitzy Atlantic City properties. Parx also features new restaurants, bars and a nightclub to give customers more to do than just gamble.

via Pennsylvania’s Parx likely to steal Atlantic City’s gamblers – pressofAtlanticCity.com : Atlantic City.

Sebastiano might want to mix in a thesaurus. “Permanently disfigured” sounds way too graphic. It’s not like Philly Park came down and threw acid in the city’s face–the city just has more competition.

The thing is, everyone knew this was coming. Even if you continued to bank on slots not coming to Pennsylvania after it became a serious possibility in 2002/03, the legislation chartering slot gaming was signed in July 2004. Even the most skeptical Atlantic City casinos, then, have had five and a half years to get ready for “new competition.”

Las Vegas faced this same problem when California Class III Indian casinos became a reality on 2000. Las Vegas gets about a third of its visitors from California. But no one said Las Vegas was permanently disfigured: instead, most people realized if the city wanted to thrive, it had to give Californians a reason to drive past a half-dozen Indian casinos on their way to Nevada.

Can Atlantic City do the same? The city did a so-so job of reacting to the opening of Connecticut casinos in the early 1990s, but it doesn’t have a history of pro-active growth. The time to have this conversation was six years ago. Granted, some casinos–Harrah’s, Tropicana, Borgata, and the Trump Taj Mahal spring to mind–responded with expansions and adding other amenities, but the market as a whole should have stepped its game up by now.

At this point, the city’s in a position where two-thirds of its properties are playing catch-up with a slot parlor, despite a thirty-year head start.

Yes, the headline is a Fair Warning reference.

This is a well-written NY Times article about where Atlantic City is today, even if it’s the same song we’ve been hearing for decades now:

Just a few years ago, Atlantic City was boomtown U.S.A. Day-tripping retirees plunked quarter after quarter into slot machines at the casino warehouses lining the Boardwalk. The city was in the midst of a huge building expansion as casinos invested billions of dollars to build new hotel towers and to dress up fading interiors. Plans for a handful of megacasinos were on the drawing board, promising to bring lots of Las Vegas-style sex and sizzle to this seaside resort.Today, Atlantic City, in the eyes of one gambling executive, Tim Wilmott, is in a “death spiral.”Rows of slot machines stand eerily empty. Over the summer, the Tropicana was sold in bankruptcy court; another 3 of the town’s 11 casinos are currently under bankruptcy protection. The lender for yet another, Resorts International, is in talks to take it over and could by year-end. Resorts was the first casino outside of Las Vegas to offer legal gambling, in 1978.Many of the rooms stuffed inside luxurious towers built during the high times are empty during the week. And plans for a majority of the megacasinos have been shelved. Only one, the Revel, is under construction — and many question whether its developers will be able to raise enough money to finish the project.The economic slowdown has shown that the gambling industry is not quite as recession-proof as was so long believed. Gambling on the Las Vegas Strip is falling on a par with Atlantic City, and many other gambling locales nationwide are also hurting. But Atlantic City’s challenges may be greater than those faced elsewhere. A second blow — and one that most of the local casino operators here underestimated — is coming from gambling operations that opened in recent years in nearby states.

via Can Atlantic City Raise the Stakes and Move Beyond Gambling? – NYTimes.com.

You’ve got to understand that I’ve been hearing this same debate (”Atlantic City is dying…no, it’s just around the corner from greatness”) all of my life, so I’m a little jaded. The city has always been just this close to turning it around, or dropping off the face of the earth.

I think I’ve weighed in on Wilmott’s provision before, but I’ll repeat myself: this guy wasn’t talking death spiral when he was trying to finagle the entire Bader Field site from the city or buy the bus lot on Route 30 and have the zoning changed so he could build a casino there. When Penn National actually stops kicking the tires and buys something on the Strip, maybe the company will have a little more relevance.

So is the city doomed or on the verge of a golden age of prosperity? I’d guess that it’ll continue scuffling along as it has been for the last 30 years, with a little less reliance on day-trippers.

Those of you familiar with Ventnor might lament the passing of an age: that aluminum section of boardwalk is being replaced, at last, with plain old wood. From the AC Press:

About two blocks of Ventnor's Boardwalk near the Atlantic City line are so odd because the surface is made of aluminum, not wood. Those aluminum planks have also been in place for more than 35 years, much longer than even the most durable wood can survive when it's exposed to all the oceanfront rain, snow, ice, sun, salt, sand and other enemy elements that Boardwalks face every day.

But after a test run Monday, city workers started Tuesday to tear out the metal section of Ventnor's Boardwalk, which runs between Austin Avenue and Vassar Square. Because for all their years of staying nearly maintenance-free, the aluminum planks tend to get slippery when they're wet – a tendency that many Boardwalk regulars say they won't miss at all when the metal is just a memory.

Dave Smith, the city's Public Works director, could not give an estimate on how long it will take to remove roughly a tenth of a mile of aluminum and put wood back in the planks' place. But Smith says the metal has been part of Ventnor's Boardwalk scene since 1972.

“And we never had to replace one piece,” Smith said, as his crew used power saws to cut the aluminum planks in their center, then unscrewed the metal boards and pried them up with an oversized crowbar.

The aluminum generated controversy right from its start in Ventnor. Charlie Cianci, a former member of the City Commission, led a petition drive in 1974 to give voters a say on the metal Boardwalk. In a referendum, the town's residents approved a measure saying “the Boardwalk shall not be altered, and it shall remain forever more a basically wooden structure as it exists now.”

Cianci and his allies were worried both that the surface was too slippery and that electricity to the metal Boardwalk – for street lights – could also be dangerous. He says Atlantic City Electric stepped in to make sure the electricity was grounded correctly to eliminate that safety hazard, and the opposition movement kept metal from slipping much farther into Ventnor than it did.

“Otherwise, that whole Boardwalk would have become aluminum,” Cianci said Tuesday.

Current City Commissioner Stephen Weintrob says it wasn't electrical worries that led to the decision to get the aluminum out, but it was “a safety issue. It's tough on bikes, they slip and slide. And runners have complained over the years.”

via Ventnor scrapping metal Boardwalk – pressofAtlanticCity.com : Latest News.

Interesting that they considered making the whole boardwalk aluminum. I actually always liked the metal boards because they were way friendlier to rollerblade/skateboard wheels than the wood, which wasn’t as well maintained during my formative years as it is today.

Gotta love those comments, too, especially the repetitious guy who likes the Wildwood promenade. It reminded me of Manos: The Hands of Fate.

Casinos in Atlantic City continue to post revenue declines, as the July number prove. From the AC Press:

Casino revenue sank to its lowest level in 12 years in July, another ominous sign that there will be no summer turnaround for the troubled gaming industry.

In what is ordinarily the biggest money-making month on the casino calendar, revenue generated by slot machines and table games fell 12.7 percent compared with July 2008, according to figures released Monday by the New Jersey Casino Control Commission.

Altogether, the 11 casinos took in $383 million in winnings, the worst July since 1997. An even more dramatic comparison is this July versus July 2005, when casinos posted an all-time record of $504.8 million in revenue. The 2005 figure is 24 percent higher than this July.

Only Trump Taj Mahal Casino Resort saved the industry from the ignominy of having every gaming hall in town suffer a decline. Boosted by a 45 percent jump in table game revenue, the Taj Mahal was up 8.7 percent overall for July.

Atlantic City has stumbled through 11 straight months of declining revenue and is heading for its third straight down year – a stunning slide considering that the first 28 years of casino gambling were consecutively higher.

Atlantic City casino revenue takes 12-year tumble, July figures show

Not good at all, and I don’t see any signs of this getting better any time soon. The institutional response seems to be “Batten down the hatches, ride out the storm.” That would be a great approach if things weren’t changing, but it’s obvious that the gaming landscape of the Northeast has changed considerably in the past two years, and will consider to do so. Further down in the article, there’s a statement that the hotel rooms are full, but day-trippers are staying away. Given that slot parlors have opened across Pennsylvania, one of the city’s primary day-tripper markets, that should be surprising. So maybe it’s time to build more hotel rooms?

Things just look bad. It doesn’t help that the UAW has put up billboards reading “EVERYONE LOSES” in giant type, with smaller type saying “At Bally’s and Caesars,” with a tiny, nearly invisible header that says “When workers are treated unfairly.” Seriously, I didn’t see that header until maybe the tenth time I saw one of those billboards. And they’re everywhere, from US 95 just north of the Philly airport to up and down the Expressway. If that’s not enough, they even had it on a banner plane, flying over the ocean for all of the beach-goers to enjoy. I’m not exaggerating at all when I say that, from a distance and at high speeds, you can only catch “EVERYONE LOSES” before you’ve driven past.

I’m not saying dealer unionization is good or bad–that’s for dealers and only dealers to decide. This just seems like the UAW is just poisoning the waters down in Atlantic City. I can’t think of too many things that are more demoralizing to potential visitors than a big sign saying EVERYONE LOSES. I guess this is the approach that’s brought prosperity and success to the American auto industry, so it should work wonders for Atlantic City casinos.

About the only bright spot for the city is the opening of Revel, which should bring in multi-day visitors who aren’t going to settle for a few hours at a Pennsylvania slot parlor instead. If it’s successful, it’s possible that other operators will finally embrace the “resort model” and join Borgata and Harrah’s. The key, I think, will be doing this in a way that’s not too upscale for the market. There are plenty of people who want to have a few days vacation and don’t mind gambling a bit, but don’t want to pay $200/night for a room or $100 for dinner. Atlantic City could position itself as a mid- to high-market destination resort, with some amenities for high rollers but the bulk of its room and f&b inventory geared at a slightly less affluent demographic. For the foreseeable future, it looks like everyone’s going to be slightly less affluent, anyway.

Here’s something to remind us that an oceanfront view can be great, but an oceanfront smell isn’t always the best. From the AC Press:

Local beach patrols reported spotting mussels along area beaches Sunday, but so far there have been no problems.

Atlantic City Beach Patrol Chief Rod Aluise said there were some mussels on the beach by Albany Avenue near Ventnor, though it was not a big problem.

The problem in the city, Brigantine and other beachfront communities Saturday was clam worms, also known as jelly worms or bugs.

Aluise said the clam worms are harmless, but swimmers and beachgoers are bothered by them because of the “icky factor.”

The clam worm problem only happened Saturday.

Margate Beach Patrol Lt. Joe Cincotta said a lot of mussels, about a foot deep, washed up by Washington Avenue, and to a smaller extent on Monroe and Quincy avenues.

“It's pretty heavy, the heaviest we've seen in a few years,” said Cincotta, adding that it smells, but there have been no complaints.

Ventnor Beach Patrol Lt. William Ferry said the mussels were around New Haven Avenue, and they haven't gotten any complaints about the smell. Ferry said they got clam worms on Saturday, too.

via Mussels invade area beaches – pressofAtlanticCity.com : Breaking News.

I figured this article would be a fun break from the usual doom and gloom around here because it’s got such a small-town charm.

Plus I used to work on the beach in Ventnor, so a few years ago I would have been one of the guys cleaning up those mussels at Newport Ave (you’ve got to click through and see the photo).

Yes the Tropicana Atlantic City, which was “repossessed” by the Casino Control Commission over a year and a half ago, has finally been sold…to Carl Icahn. From the AC Press:

Tropicana Casino and Resort, once expected to fetch $1 billion or more, was sold today for $200 million to a group of lenders headed by billionaire financier Carl C. Icahn.

A bankruptcy court judge approved the sale agreement, culminating an 18-month quest for new ownership that began when the economy was strong and ended with it in a deep recession.

Icahn and his fellow lenders, who already hold a $1.4 billion mortgage on Tropicana, timed the market downturn perfectly by stepping in when no other investors were willing to bid to drive up the price.

"There is basically no other option available at this point," U.S. Bankruptcy Court Judge Judith H. Wizmur said while approving the sale to the Icahn group.

The deal is pending regulatory approval by the New Jersey Casino Control Commission and a final closing, a process expected to take until year's end.

Tropicana went on the market in December 2007, when the troubled former owners were stripped of their New Jersey gaming license for mismanagement and regulatory violations.

Bankruptcy judge approves $200M. Tropicana sale to Icahn group.

Since Icahn specializes in turning around distressed properties, this might not be an entirely bad thing. Yes, there’s the sad example of the Sands in Atlantic City, but the Stratosphere here in Vegas ended up being a win-win-win: he took the casino out of bankruptcy, ran it successfully, and sold it at a profit. That’s how the game is played.

At this stage, the Tropicana brand name has suffered such severe collateral damage in Atlantic City that I wonder whether a complete re-branding has been contemplated, since the casino is no longer owned by the parent of the Las Vegas Tropicana. I also wonder whether being a standalone property will change anything about the way it’s marketed.

You can probably order a margarita at the Shell, but Trump Marina isn’t turning into Margaritaville anytime soon. From the AC Press:

An agreement to sell the aging Trump Marina Hotel Casino and transform it into a Margaritaville-themed gaming hall was terminated Monday, after the expected buyer failed to close on a deal by last week’s deadline.

Talks had continued over the weekend between Trump Marina’s parent company, Trump Entertainment Resort Inc., and Coastal Marina LLC, with the possibility that the sale deadline would be extended.

But Trump Entertainment CEO Mark Juliano said his company decided instead to end the agreement after receiving a letter Monday from Coastal’s lawyer claiming Trump Entertainment had breached its contract agreement by engaging in “fraudulent activity.”

*

Juliano said his company was being accused of diverting customers and business from Trump Marina to the other two Trump-owned properties in Atlantic City, Trump Taj Mahal Casino Resort and Trump Plaza Hotel and Casino. He said Coastal also claimed that Trump Entertainment “knowingly did not perform in good faith.”

Juliano denied those charges.

Deal to buy Trump Marina casino is off.

It’s going to be difficult to get anything at all for the Marina. It’s got a great location, but is one of the worst-performing casinos in the city. This April, it made about $13.6 million, less than Resorts, the Hilton, or Trump Plaza, and about 1/3 of what the Borgata pulled in.

That being said, the property has great potential,with the Farley marina directly adjacent. If someone bought both it and the bayside MGM land (not the Borgata-adjacent MGM Grand AC tract), they could build something phenomenal. But anyone who’s looking to build in Atlantic City right now either isn’t thinking right or sees something that no one, including those who’ve got billions invested in the market, can see.

This story is just appalling: a disgruntled patron shot a Trump Taj Mahal casino executive in cold blood, allegedly because he was frustrated by his roulette losses. From the AC Press:

Despite his claims that he racked up millions of dollars in gambling losses, the accused killer of a casino supervisor actually won $1,100 this year playing roulette at Trump Taj Mahal Casino Resort, a Trump executive said.

Gambling records dating to 1995 also show that Mark E. Magee lost $6,435 at the Taj Mahal’s gaming tables in the past 14 years, according to Mark Juliano, chief executive officer of Trump Entertainment Resorts Inc.

Juliano said the casino’s records suggest that Magee lied when he told police investigators that he was a compulsive gambler who has lost millions over the years. Magee also claimed that casino had cheated him by rigging the games.

“He’s lost $6,435, so his math is a little off,” Juliano said mockingly in an interview Saturday.

Calling Magee’s cheating allegations “ludicrous,” Juliano said New Jersey’s tightly regulated casino industry and the Taj Mahal’s own financial controls make it virtually impossible to fix games.

“I think it’s important to refute the idea that anything could happen because it’s impossible because of the controls we have in place,” Juliano said.

Magee, 57, of Norristown, Pa., is accused of gunning down Taj Mahal shift manager Raymond Kot near the casino floor on Wednesday. He has been charged with murder and weapons offenses and is being held in the Atlantic County Jail on $1 million cash bail.

Police investigators in Norristown said Magee claimed that, in the past three or four years, he would always be winning at the roulette table until a casino manager he knew as “Ray” — apparently referring to Kot — would arrive. Magee said he believed Ray would then make a call to someone to rig the game, and the losses would start.

“His intent was to kill someone from upper management from the casino because they were responsible for him losing his money,” Norristown Detective Raymond E. Emrich wrote in a police affidavit.

Trump executive says alleged killer lied about gambling losses, rigged games.

Most of you know that I used to work at the Taj, and I remember Ray Kot from my time there. We didn’t know each other socially or anything, and interacted about as much as you’d expect a very junior surveillance operator and a senior casino manager to. But I remember him as a nice guy who knew his job well and seemed to enjoy doing it.

Magee’s claims are ridiculous. Even if you accept the dubious proposition that a casino manager could somehow affect the outcome of a roulette game by making a phone call, the story makes no sense. If he started losing every time Kot came on shift for the past three or four years, why didn’t he just cash out and walk over to Showboat or Resorts when he saw Kot arrive? There are covered bridges to both properties, so he wouldn’t even have to go outside. It would take maybe ten minutes to cash out, walk over, and buy in. It’s tragic that a good man with a family lost his life for something as senseless as this.

That being said, this murder might prompt casinos to review their security profiles. I can’t see American casinos installing metal detectors at the door like Macau casinos do, but increasing on-floor security and giving them better training in recognizing and dealing with situations like this–where a distraught man was apparently stalking Kot–wouldn’t infringe on the freedom of guests and would greatly increase the safety of both guests and employees. There was recently a murder at Caesars Palace here in Las Vegas, where the victim–a casino restaurant employee–and the alleged killer knew each other. In an open society, there will always be tension between crime prevention and liberty, so there’s no easy answer to this problem. This murder could have happened anywhere–in a restaurant, a hospital, or a school. But people often have the presumption that casinos are safer than other institutions because of the increased security profile. Unfortunately, that’s not always the case.

Almost 20 years to the day that Stanley Fujitake made gambling history at the California in downtown Las Vegas, a woman in Atlantic City has taken his crown as the longest craps roller ever. From the AC Press:

A Morris County woman gave a whole new meaning to the expression “being on a roll,” as she broke the world record for shooting dice at the Borgata Hotel Casino & Spa.

Pat DeMauro bought into a craps game for $100 Saturday night and held the dice for four hours and 18 minutes. She threw the dice 154 times before she finally “sevened out,” Borgata officials said Sunday. The previous record for longest craps roll was held by Stanley Fujitake, of Honolulu, at 3 hours and 6 minutes, and it took place May 28, 1989, at the California Hotel & Casino in Las Vegas.

Lucky lady makes craps history in Atlantic City.

Fujitake’s record is a big deal at the California; they even have a “Golden Arm Club” (so-called in honor of his nickname, “Golden Arm) filled with folks who have gotten close to his legendary exploit.

The Press reports that the Tropicana Atlantic City is almost ready to go on the block:

After a 16-month saga, Tropicana Casino and Resort is one step closer to being sold. New Jersey gaming regulators today authorized the property to be auctioned off in bankruptcy.

Gary S. Stein, the state-appointed conservator overseeing the sale, said he would file a Chapter 11 bankruptcy petition later today to begin the auction process and designate a group of lenders headed by billionaire financier Carl C. Icahn as the leading bidder. Icahn and his fellow lenders have offered $200 million.

The auction is expected to occur in June. Although the Icahn group has been named the so-called "stalking horse," or front-runner, other bidders will have an opportunity to submit higher offers.

Press of Atlantic City, – pressofatlanticcity.com.

Wow, they sure work quickly, don’t they? The Tropicana saga is certainly not the brightest moment for New Jersey casino regulation.