A.C. casinos' revenue off 5.6 percent in March

Atlantic City's casinos reported a 5.6 percent decrease in gross gambling revenue in March compared with a year ago.

The gaming halls reported $300.8 million in revenue - lowest for the month since March 1994, which brought in $268 million. But they also had one less Sunday to work with, more competition from Pennsylvania, and a frugal clientele.

"We believe the operating environment continues to reflect weak macroeconomic conditions, tightened consumer spending, and elevated Northeast and Mid-Atlantic slot supply, which has plagued the nation's second-largest gaming market," Dennis Farrell of Wells Fargo Securities L.L.C. said Friday in a note to investors.

Yet, compared with February's double-digit decline - thanks, in part, to snowstorms that crippled the region - some operators said they were encouraged by March's showing.

"I thought it was a good month, coming on the heels of February," Don Marrandino, Eastern Division president of Harrah's Entertainment Inc., said Friday during a conference call on revenue. Harrah's owns four Atlantic City casinos.

"I'm very encouraged about the results we're getting," he said. "I think we're turning the corner here." Marrandino cited as a clear positive an $11 increase in the daily average rate for the city's hotels from a year ago.

Slots revenue declined 5 percent year over year, to $207.3 million; table-games revenue fell 6.8 percent, to $93.5 million.

Meanwhile, Pennsylvania's nine casinos continued their upward trajectory, up 29 percent last month in gross slots revenue from March 2009, when there were only seven slots parlors. Collectively, they generated $200.2 million.

Parx Casino in Bensalem, the perennial leader, stayed on top, generating $36.5 million, up 11.5 percent from a year ago.

"We maintain our cautious investment thesis toward the New Jersey market," analyst Farrell said, "as we believe [Atlantic City's] slots business will likely continue to see a challenging environment in 2010."

The Shore resort has been hit with a series of investment setbacks this year. Pinnacle Entertainment Inc. and MGM Mirage Inc., both based in Las Vegas, have pulled out.

The only project in the pipeline, the $2 billion Revel Casino next to Showboat, still needs an additional $1 billion in financing for completion.

On April 1, Wall Street investment bank Morgan Stanley announced that it was disposing of its 94 percent stake in Revel, clearing the way for another investor to take over. Casino magnate Steve Wynn confirmed Friday that he would not be that investor.

Revel's chief executive has been meeting with Chinese banks to secure the remaining financing. In the meantime, the project's application for $350 million in state tax breaks under an economic-stimulus program has attracted the ire of labor unions and fiscal conservatives.

"We don't believe Morgan Stanley divesting its stake in the project should have an impact on our application," Kevin DeSanctis, chief executive officer of Revel Entertainment Group L.L.C., which is behind the partially built venture, said Friday.

But the controversy hasn't died down.

On Wednesday, Superior Court Judge Carol Higbee ruled in favor of a public referendum on whether the state should grant the tax breaks to Revel, siding in favor of the local casino union, Unite Here Local 54.

The city rejected a referendum earlier this year. Senate Bill 920, which would prevent referendums on all projects receiving state stimulus money, is awaiting action by Gov. Christie. The state Economic Development Authority is set to take up the matter soon.

"A project of this magnitude, in this economy, needs strong leadership from the governor," said State Sen. Raymond Lesniak (D., Union), sponsor of the Senate bill. "At best, he's been agnostic, at worse not supportive. Either is a killer."

Only one of Atlantic City's casinos reported increased revenue last month: Harrah's Resort, up 4.9 percent at $38.9 million. The top performer was the Borgata at $52.3 million, though that was down 1.6 percent from $53.1 million a year ago.