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No Grand Entrance For Revel As AC Gaming Revenue Falters Again

12 Jun, 2012

Figures released earlier this week showed that Atlantic City gaming revenues fell 9.5 percent year-on-year to $263m in May, as the shoreside market continued its downward spiral despite a first full month of operations for New Jersey’s twelfth licensed casino, Revel.

The New Jersey Casino Control Commission’s latest revenue report showed that, when excluding contributions from the recently opened Revel, marketwide gaming revenues fell an even steeper 14.3 percent year-on-year to $249.1m.

Gross slot revenue dropped 9.3 percent to $186.9m on a 9.9 percent decline in slot handle and generally flat slot hold, while revenue from table games sank 10.2 percent to $76.1m.

Addressing the results in a follow-up note to clients, Bill Lerner of Union Gaming stated grimly: “There are few if any positive data points to extrapolate from today’s gaming numbers.”

The Borgata maintained its clear market leadership on a property-by-property basis with gaming revenues of $50m, though it marginally underperformed the wider Atlantic City casino industry in growth terms, falling 10.6 percent year-on-year.

The best-performing casino among the complement of 12 was the Tropicana, which saw gaming revenues fall a comparatively soft 2.1 percent to $21.9m following an outperformance which Union Gaming’s Lerner attributed anecdotally to management at the property “buying business” with generous comps.

In its first full month of operations the upscale Revel property meanwhile saw gaming revenues climb marginally month-on-month to $13.9m, falling well short of the level required to give hope to those waiting on a revival for the ailing casino market.

Despite a “disappointing” eight week test period since its opening on April 2, Lerner acknowledged that the property didn’t have its official grand opening until Memorial Day weekend late in May and that next month’s results will reflect a full month of operations post the official grand opening.

Lerner noted that Revel is becoming more aggressive on the promotional front - “clearly not a positive for the market” according to the analyst – with the property now offering a tier level match for other loyalty cards in the market, including up to $50 instant free slot play,  up to $500 bonus free slot play and free rooms for select levels.

Adding fuel to the fire in terms of the argument for over-saturation in the Atlantic City casino market, the Trump Taj Mahal, close neighbour to Revel, saw total casino win fall 22.4 percent to $25m on a 40 percent dip in table revenue.

With regard to the cannibalisation issue, Lerner wrote: “The neighbouring Trump Taj Mahal got walloped for the second month in a row… If Revel ramps up and starts to perform well, we think it will benefit its neighbouring boardwalk properties, but to date this hasn’t been the case.”