Investor analyst not betting on Atlantic City recovery
More than one year ago, New Jersey Governor Chris Christie placed a bet on Atlantic City by outlining a plan to turn the seaside resort into “Las Vegas East.” It has yet to happen but could still be a long ways off.
Moody’s Investor Service, for one, is not betting on it. The investor analyst says there’s a continued sluggishness in the casino market and that consumer spending is not catching on as expected.
“Unfortunately an extended period of consumer weariness or any economic event that hurts consumer demand for gaming could have a material negative effect on company earnings and lead to some downgrades," Keith Foley, a Moody’s senior vice president, told Asbury Park Press.
Gov. Christie signed a bill last year that restructured Atlantic City by forming a state-run tourism district. The bill also shrunk gaming regulations — which was designed to save the casinos millions of dollars in oversight costs.
“Business results of the casinos show a lukewarm response to the changes,” reports the Press.
The net amount of money from players handled by the casinos for the first five months of this year was down 7.6 percent compared to the same period in 2010, according to state regulators.
Business at the state’s four racetracks has also slowed. That is in line with a national trend that shows a 7.7 percent drop for the year in handle on thoroughbred horse races, according to Equibase.
“You can only speculate if the economic slump is having an equal effect on horse racing tracks and casinos, but both areas are hurting,” said Lou Raffetto, a former New Jersey track executive.
The Christie administration’s riskiest bet in Atlantic City has been placed on the Revel Casino, said the Press. Construction there restarted after the state approved a US$261 million tax reimbursement rescue. Revel is now on track to open next year.
The Moody’s analysts said they “are not convinced the economic conditions at the time of Revel’s opening will be strong enough to support the company's initial ramp-up expectations and longer-term debt service requirements once the interest reserve is fully utilized. A prolonged sluggish recovery of the U.S. economy could make it difficult for Revel to achieve targeted business volumes.’’
By David Wilkening
David
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