On Monday, the 14th of July, yet another casino on the Jersey shore has announced its forthcoming closing. The management of the Trump Plaza Hotel, which has been operating since 1984 and employs over eleven hundred people, has announced that the casino will officially cease all operations on September the 16th of 2014.
Trump Plaza Casino can now officially be considered the fourth Atlantic City casino scheduled to close down in 2014. First, on the 13th of January of this year, The Atlantic Club suddenly shut its doors to the players. Only five months later, another Atlantic City casinos, made a similar announcement. Showboat Atlantic City Hotel and Casino currently owned by Caesars Entertainment, is currently scheduled to close in August of this year. Finally, Revel Atlantic City, which has been operating only since April of 2012 and as of today still stands as the newest addition to the Atlantic boardwalk still in operation, has already filed twice for bankruptcy. The casino is currently in Chapter 11 proceedings and, unless an interested buyer can be found before the imminent auction and asset liquidation, the casino may be forced to close its doors by the end of September.
Together, the four casinos currently employ a workforce of over 8000 people, and have recorded combined gross revenue of almost 600 million dollars last year alone. However, the significant decline in monthly profits for each of the four casinos over the last 12 months is impossible to overlook.
In January 2013, The Showboat Atlantic City Hotel and Casino recorded gross revenue of $13.6 million dollars for the month, accumulated through profits from 114 table games and 2,294 slot machines. Twelve months later, in January of 2014, the casino’s gross revenue decreased by over 16% to only $11.3 million, acquired from 113 table games and 2,187 slot machines. The casino did experience a slight discrepancy in the “win-or-loss” percentage between the two periods, with the January 2014 showing ratios of 9.4% for slot machines and 16.9% for table games, and the January 2013 recording 9.8% and 18.6% in the same respective categories.
While this random short-term statistical variance could certainly affect the reported gross revenue for the Showboat Atlantic City Hotel and Casino, it had no effect on the significantly more important financial parameter in the casino business, namely the total amount of money exchanged for chips and bet commonly referred to as the drop and the handle. In January of 2013, The Showboat casino’s drop/handle from 90 table games was $16 million dollars. Twelve months later, the drop/handle from 89 table games was reduced to $14.6 million. If one were to evaluate the drop/handle for the two periods over an average of 89 table games, the result would be an almost 8% decline of the total amount of money wagered in January 2013 and the same month in 2014.
The other casinos now find themselves in an equally dire financial state, or worse have already suffered the impending consequences, as was the case for the Atlantic Club casino, whose fate has been sealed since January. Trump Plaza Hotel, the most recent addition to the list of doomed Atlantic City casinos, has similarly recorded massive reductions in both the drop/handle amounts and its gross revenue over the last twelve months. Looking at the financials for the month of April, the total casino win for that month decreased from $6 million in 2013 to only $4.4 million in 2014, representing a revenue percentage drop of over 26%. Furthermore, the average drop/handle amounts for table games and slot machines have recorded reductions of 37.5% and 19.4%, respectively. As of this moment, Trump Plaza Hotel is desperately searching for a suitable buyer. The last publicized offer of $20 million, made last year by a company from California, was rejected by the property mortgage holder: the multi-billionaire Carl Icahn.
The substantial reduction in profits of multiple Atlantic City casinos has been primarily attributed to the high level of competition from casinos in neighboring states. While only a decade ago Atlantic City was considered the primary destination for players on the East coast, the times appear to have drastically changed. Today, players from states like Maryland, New York, or Pennsylvania are no longer forced to make the long trip to the Jersey shore to sit down at their favorite table game, but instead can test their luck at one of the several local casinos or casino resorts found in each of these states. The migration of players from Atlantic City casinos to the more local venues has already had a tremendous impact on the proceeds generated by the Jersey casinos, cutting them almost in half since 2006. Furthermore, the level of competition is only expected to continue increasing further, as additional gambling venues are already being negotiated in New York, as well as northern New Jersey.
In 2012, the gambling industry in Atlantic City was responsible for over 78% of all revenues generated in that city. Only two years later, that figure dropped to 71.5%, with more substantial reductions to follow in the upcoming years. Consequently, both the mayor of Atlantic City, Don Guardian, and the state governor Chris Christie have begun planning a future revitalization of Atlantic City. From the little that is currently known or has been publicized of the plan, the future Atlantic City would be transformed into a locale featuring a conference center with multiple expos, a college town, and a technical center, with the currently operating casino hotels and resorts no longer serving as the flagship of the region, but simply as additional available attractions in the area.
The future of Atlantic City now lies in the city’s ability to make rapid and effective changes to the gambling establishments, as well as the overall economy in the area. Both the casinos and state officials are already in the process of implementing several promising ideas and projects meant to attract both, groups of new players willing to try their luck at a table, and seasoned gamblers that might have migrated to other venues closer to their homes. Ultimately, only time will tell if any of these proposals will be able to protect Atlantic City from further reductions of revenue streams and profits.