Atlantic City dealt a bad hand

Only four years ago, Atlantic City packed the boardwalk and was seen as the undisputed gaming capital of the Eastern seaboard. But today, the city faces a troubled future with some casinos seeing odds against tomorrow.
 

Four of the 11 hotel-casinos there are in some state of distress, according to Real Capital Analytics.
 

"I’m not sure all of these casinos will find homes," said the company’s analyst Chris Snow. "I wouldn’t be surprised if two of the 11 don’t make it at all."
 

Atlantic City’s survival may rest on a complete overhaul of the area’s offerings, casino executives said during a Reuters Travel and Leisure Summit.
 

"If we don’t do something to make it better, then it is going to continue to get more painful," Harrah’s Entertainment Inc. Chief Executive Gary Loveman said.
 

Atlantic City could rebound with more marketing dollars, better entertainment and an overhaul of the city’s safety systems and infrastructure, said Loveman.
 

Tourism officials point out the city of Las Vegas through the Convention & Visitors Bureau spends USD$300 million or more annually to promote the area, while the New Jersey destination only spends about USD$8 million a year.
 

All of its casinos have been struggling for the past three years.
 

“The news was worst for the two casinos believed to be the most endangered: Resorts Atlantic City, which was taken over by its lenders in December, and the Atlantic City Hilton Casino Resort, which defaulted on its mortgage in July and could be headed for the same fate,” said the AP.
 

Resorts told New Jersey officials in a quarterly tax return that its financial challenges "raise substantial doubt about the company’s ability to continue as a going concern." It said three major storms this winter made even its projections from November look too optimistic, and "the company will be subject to severe cash shortages."
 

The Hilton told the state it stopped paying on its USD$359.5 million debt because of "the current economic conditions."
 

The city’s three casinos formerly owned by Trump Entertainment Resorts remain in bankruptcy court with a ruling expected in the near future.
 

Also threatening Atlantic City is the growing number of slot parlors popping up in places like Pennsylvania and Connecticut.
 

Last year, the city’s USD$3.2 billion in revenues represented a 25 percent drop, which may continue through 2010. The Boardwalk itself had an 8.5 percent decline last year in visitors.
 

“The way the economy is, there’s not enough gaming revenue to support 11 casinos,” said Cory Morowitz, a well-known gaming advisor.
 

Even successful casinos are having problems.
 

“Since it opened in 2003, Borgata Hotel Casino and Spa in Atlantic City, N.J., routinely receives the ultimate accolade: It doesn’t feel like an Atlantic City casino,” said ADL Daily Finance. It appears more in tune with more upscale Vegas.
 

But with profits way down, the casino is being sold.
 

"Atlantic City is not for the faint of heart," said Morowitz,. "Atlantic City used to be a very predictable market. It grew a little bit every year. Now it’s become unpredictable, and, in the short run, it doesn’t look great."
 

By David Wilkening