Analysts: Fewer Casinos in AC’s Future
A panel of analysts speaking at a regional gambling conference Tuesday in Atlantic City said a market that has already lost one casino this year still has too many.
Adam Rosenberg, a managing director with Goldman Sachs, said "reducing capacity" is already underway, which he considers positive.
Srihari Rajagopalan, a debt analyst with UBS, agreed.
"You are seeing the market right-size, which is a positive," Rajagopalan said. "There are unprofitable casinos shutting down."
Earlier this month, the CEO of Caesars Entertainment, which owns four casinos here, made the same point. But Gary Loveman did not say whether he expects to sell or close one of his Atlantic City properties or engage in another Atlantic Club-style takedown of someone else's property. Caesars and Tropicana bought the Atlantic Club out of bankruptcy, divvied up its assets and closed it on Jan. 13.
Several analysts listed Showboat and Trump Plaza among the most vulnerable of Atlantic City's 11 remaining casinos.
"My advice to someone who's thinking about taking on one of these properties, that thinks they can build a better mousetrap is: Don't do it," said Joel Simkins, an analyst with Credit Suisse Securities. "It's very, very difficult."
The analysts also say they don't expect Revel to sell for anything close to the $2.4 billion it cost to build. Several say even $300 million might be too high for the city's newest casino, which continues to lose money.
Drew Goldman, a managing director with Deutsche Bank, said Revel is losing $50 million to $80 million a year.
"If someone said they were going to shut down three casinos in Atlantic City, Revel's share would increase. But in lieu of that happening, I think it's very tough."
The panel at the East Coast Gaming Congress also says a planned casino in Orange County, New York, will badly hurt Atlantic City, with Goldman predicting it would be disastrous for the seaside resort city.
"I think about how close that is to New York City and northern New Jersey, which is a very big source of customers for Atlantic City," he said. "It is 15 to 20 minutes for people in Bergen County, maybe 30 minutes for people in Essex County."
Timothy Wilmott, president of Penn National Gaming, is competing for that New York license.
"That's going to have a dampening effect on Atlantic City," he acknowledged.
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