CASINOS: Tropicana's big-money bet
Posted in: In The News on Monday, October 31, 2016
This summer, the Tropicana in Atlantic City completed a $40 million renovation project that included updated hotel rooms, another property entrance, a high-limit slots area and a number of added new features, from a luxury hair salon to a premier nightclub. The upgrades came a year or so after the resort completed a $50 million renovation that featured a modernization of the casino floor, more hotel room updates, a new fitness center and the creation of a multimedia light and sound show on its boardwalk façade. Who says Atlantic City is crumbling? At a time when five casinos have closed in less than three years, the Tropicana’s yearly investments back into its own property appear to be an anomaly. Or a business success story — at least, that’s how Tropicana CEO and President Tony Rodio sees it. “We are financially successful, strong and continuing to grow,” he said. Indeed, the Tropicana, like other remaining properties in the city, has seen its market share grow with less saturation. But Rodio also attests the success of the resort to its commitment to business and the age-old adage about spending money to make money. “We think it’s critical to make sure that we focus on all three elements,” Rodio said. “The employees, the customers and the building.” Don’t be confused. Rodio is cognizant of the world around him. Just south of the building is the former Atlantic Club, closed since January 2014. A few blocks north is the former Trump Plaza, visibly in a state of disrepair since it closed in September 2014. As light and bright as the Tropicana’s new boardwalk shows may be, Rodio knows the city’s challenges are an obstacle. “It really is difficult, firstly because you have to overcome a negative perception that the general public has about Atlantic City,” he said. “They hear about the city’s financial issues and the potential for the city to go into bankruptcy, or the potential for the state to take over the city. They see all these closures, and then there’s parts of the city that are rundown and blighted. “But we’re an oasis in the middle of all of that.” Out on the casino floor, Tropicana General Manager Steve Callender says the changes have boosted morale and reinvigorated employees. “We have 30-year employees that have been become engaged by what we’ve been doing, “ he said. “They’ve got a new energy about them when we started to redo this casino floor, and they really appreciate it. They get to work more hours; their tips go up. The customers are loving it; they’re engaged with it, as well.” The success hasn’t exactly come from a secret sauce, either. Back in 2013, Resorts cut the ribbon on its $35 million Margaritaville-themed expansion and renovation project. In August, figures from the state Division of Gaming Enforcement showed that Resorts saw its gross profits rise by 26 percent over the first half of this year, compared with last year. That same report showed a 25 percent spike in gross profits for Tropicana over that time period. “The people that are investing money in their property are seeing a return for it,” Callender added. “Now that we have the right amount of casinos, you can feel comfortable about investing in your property … especially if you do it right.” Rodio said it’s not just how Tropicana is spending its reinvestment dollars but, rather, what it’s investing in. Diversification, he said, is key. With a number of changing market elements, the city’s casinos need to continue to offer a wide range of activities that might not center around or have anything to do with traditional gaming. While that’s certainly a buzzword these days in Atlantic City, Tropicana has long kept that in mind with its boasting of its IMAX theater and array of nightlife and dining options in the “Quarter” section of its resort. But the recent renovations have doubled down on those amenities, with the additions of Ivan Kane’s Kiss Kiss A Go-Go nightclub and a number of eateries, including new restaurants expected early next year from popular Philadelphia-area Iron Chef Jose Garces. It is part of a larger strategy to attract millennials, who Rodio said are often “focused more on non-gaming attractions that get them to the property.” “I think it’s even more important as we look to the future,” Rodio said. “You read so much about the millennials and they’re going to be the economic engine that’s driving the economy in the next 10 to 15 years as they gradually become more and more of an economic force.” Regardless of the confidence Tropicana is currently exuding, there is still a lot of uncertainty across the city. First, there’s the Trump Taj Mahal, managed by Tropicana Entertainment and owned by Icahn Enterprises, which closed its doors earlier this month amid poor performance and a labor dispute with the local casino workers’ union. Rodio has largely been in the news lately responding to what will happen at the Taj, but that property’s future is still very much up in the air, with rumors of all sorts continuing to percolate. That’s also being fueled by an ongoing effort in the state Legislature to effectively block the Taj from holding onto its gaming license. That situation is uncertain. There’s also the upcoming northern New Jersey casino expansion referendum that voters will consider Nov. 8. While recent polls show that the ballot question might lack the support it needs to pass, nothing is, of course, for certain. Atlantic City’s gaming market is still eagerly awaiting its fate. Rodio says that, ultimately, if there aren’t new casinos coming soon to northern New Jersey, he expects to see “some additional properties coming online or reopening” in the next couple of years in Atlantic City as market confidence builds. Even if it fails, Rodio said he expects legislators to try again. That’s why he’s hoping for a grand defeat. “I’m hoping that it fails by a pretty wide margin to send a message to Trenton,” he said.
40 years later, was A.C.'s casino gamble worth it?
Posted in: In The News on Monday, October 17, 2016
Steven Perskie thinks about the legacy of legalizing gambling here each time he sees the city’s skyline. It’s been nearly four decades since Perskie, dubbed “the father of casino gaming,” wrote the law that allowed casinos in the struggling seaside city. “The question I keep asking myself is a version of: What would Atlantic City have looked like in the last 40 years?” Perskie, 71, said Thursday. “What would Atlantic City look like today? What would the area look like today if we hadn’t done it or if we hadn’t succeeded?” With the 40th anniversary of the Nov. 2, 1976, passage of the gambling referendum approaching, he isn’t the only one asking such questions. On Nov. 8, the state will ask voters to again approve gaming, this time in North Jersey. The vote will come in the wake of five casino closings, 10,000 lost jobs and a city repeatedly near default following the opening of casinos in nearby states. For a great part of the past four decades, Atlantic City casinos created thousands of jobs, millions in tax revenue and billions in capital investments while making Atlantic City an East Coast gambling mecca. Tourism in the city increased five-fold in the first decade. Neighboring communities, such as Egg Harbor and Galloway townships, saw enormous growth as people flocked to the region for work. But critics say casinos didn’t fulfill all the promises. The gambling halls put small establishments out of business by offering dining, shopping and entertainment all in one building. Gaming tax revenue helped pay for Atlantic City housing and development, but the city still suffers from blighted areas and vacant properties, some right along the Boardwalk. “It delivered a tremendous amount of jobs, a tremendous amount of revenue. In a lot of ways, a tremendous amount of excitement,” said Bryant Simon, a historian and author of “Boardwalk of Dreams: Atlantic City and the Fate of Urban America.” “But I don’t think anybody in 1976 — that night on the Boardwalk it was bone-chillingly cold and people danced to celebrate — imagined what the city looks like now.” For Perskie, a former state lawmaker and gaming regulator, gambling didn’t accomplish everything it could have. But he said the community wouldn’t have a “small fraction of the economic viability” it has had if the referendum hadn’t passed. “The legacy is we put thousands of families in a much stronger economic position. We created a very viable industry,” Perskie said. “We created opportunities for people that wouldn’t have ever possibly been otherwise available.” Indeed, the casinos offered good-paying jobs with benefits. Workers could afford to “buy a home, send away your kids to college and retire with dignity,” said Chuck Baker, a 57-year-old city resident, casino union member and former Trump Taj Mahal Casino Resort cook. But in recent years, as competition increased, casinos told workers they couldn’t afford the labor contracts, Baker said. He blamed “hedge-fund operators” who took money out of the properties and sent it “to New York.” “That meant more money for the properties,” he said. “They didn’t want to take care of the workers.” The Taj Mahal closed Monday amid a labor strike over issues including health benefits and breaks. The Casino Association of New Jersey said the industry has “more than held up its end of the bargain” through the billions it generated in tax revenue and economic impact. “Perhaps it took five casino closures and the unfortunate loss of some of those economic benefits for many to fully understand the significant economic impact generated by our industry for not only the city and the state, but the regional economy as well,” a statement from the association said. “Even with the right-sizing of our industry, Atlantic City remains one of the largest casino markets in the country and one of the most significant economic engines in the Garden State.” At its height, the casino industry employed more than 50,000 people, including a quarter of Atlantic City’s population. Gaming-tax revenue for the state peaked at $502 million in 2006, and the city’s ratable base topped off at $20 billion in 2008. But after five casino closings in three years, the gambling halls now employ about 21,000 workers, annual state gaming revenue hovers around $200 million and the city’s ratable base is down to $6.6 billion. Casinos opening in neighboring states, a consolidation of casino companies and the 2008 national recession have diminished the city’s gambling market. Good-paying jobs and tax dollars weren’t the only promises of the casino referendum. The Casino Control Act of 1977 was intended to spark the city’s tourism industry and spur urban redevelopment. But casinos alone reaped the benefits of the subsequent tourism boom, according to a recent report from New Jersey Policy Perspective, a left-leaning think tank. There were 242 food-and-drink establishments in the city before casinos arrived. By 1996, just 142 were left, according to the report. Casinos have paid more than $4 billion in real estate taxes and funded $350 million in Atlantic City housing and development projects. But the NJPP report said the promise of the city’s urban renewal was largely ignored. New Jersey created the Casino Reinvestment Development Authority in 1984 and offered casinos two options: spend 1.25 percent of gross revenue on CRDA-issued bonds for urban and economic development, or pay a 2.5 percent tax to the state. “Casinos chose the first option. But over time, the redevelopment mission was diluted by the Legislature, allowing CRDA to spend money on tourism-related activities that directly benefited the casinos,” the report said. Ironically, proponents of North Jersey casinos are promising hundreds of millions in gambling tax revenue to redevelop Atlantic City, nearly an identical argument for gambling advocates in 1976.
Skill-based games are coming to Atlantic City soon
Posted in: In The News on Thursday, October 13, 2016
Soon gamblers won't need to rely on Lady Luck alone to win in Atlantic City.
Skill-based games are coming to Harrah's, Caesars and Bally's after the state Division of Gaming Enforcement gave approval late Wednesday night to GameCo, Inc. of New York to install the machines at casinos owned by Caesars Entertainment, according to the Associated Press.
The machines could arrive as soon as Monday, but will need three weeks of testing before the public gets a crack at them.
Harrah's spending $30M on Atlantic City hotel renovations
Posted in: In The News on Friday, September 23, 2016
One of Atlantic City's top casinos is getting a $30 million makeover. Harrah's is redoing 450 rooms and suites in the casino's Bayview Tower. The work will begin in mid-November and should be finished by Memorial Day weekend in 2017. It is part of a race among Atlantic City's most successful casinos to remain competitive by reinvesting in their properties. Parent company Caesars Entertainment is spending $200 million on projects at Harrah's, including the recently opened Waterfront Conference Center, and planned improvements to The Pool After Dark, its fitness center and food court. The newly redone rooms are close to the conference center, which Harrah's president Rick Mazur says is helping drive new business to Atlantic City. "When we opened the conference center, we saw a lot more conferees and conventioneers coming to Harrah's, and to Atlantic City as a whole," he told The Associated Press. "This tower is the next closest to the conference center, and the rooms could use a refreshing. This is the first of several renovation projects we hope to be doing soon."
Atlantic City casino profits jump 21 percent
Posted in: In The News on Monday, August 22, 2016
Casinos in the resort saw a more than 21 percent increase in their operating profits during the first half of the year, according to state figures released Monday afternoon.
The eight remaining casinos had a combined second-quarter profit of $259 million, compared to $213 million in 2015, according to the quarterly report.
“Profits rose more than 21 percent in the first half of this year and, for the first time in eight years, every single bricks and mortar casino reported positive operati...
Atlantic City casino revenues rise by more than 20 percent
Posted in: In The News on Monday, August 22, 2016
The Atlantic City casino industry boosted profits by more than 20 percent in the first half of 2016, according to figures released Monday by the state Division of Gaming Enforcement.
The improved bottom line came even as total revenues for the same period barely improved, from $1.66 billion in the first half of 2015 to $1.68 billion in the same period in 2016.
“Slowly but surely, casino profits are increasing as operators in Atlantic City work to rebuild their business,” said Matthew Levin...