Norton on Atlantic City Casino Industry: NJ Made Bad Mistake.

From former casino executive Steve Norton:  New Jersey made a terrible mistake on their November casino vote for North Jersey gaming. Unfortunately the voters had one sided misinformation about North Jersey’s potential gaming impact on Atlantic City.

The negative impacts had already descended on AC, when Pennsylvania approved slots and then table games, at 4 greater Philadelphia locations, and 3 others aimed directly at North/central New Jersey’s population. In addition AC’s NJ/NY patron base was further impacted as Aqueduct opened with 5,000 more slot machines to add to the already existing 5,000 at Yonkers.

The impact on Atlantic City had been a decline of over 90% of our line run bus customers, that exceeded 14 million persons a year, or 40% of our visitor totals, mostly coming in non summer mid-week days and nights; when our room demand was minimal..

A North Jersey casino would primarily impact Parx, Sands Bethlehem, two Poconos casinos and Yonkers and Aqueduct and any AC impact would be offset by the estimated $200 million annually provided to our casino resort, plus returning another $200 million to senior/disabled programs, replacing taxes from AC casinos that have been lost since 2006, or a total of $1.8 billion.

Atlantic City has to follow another route to save the resort, that currently discounts mid-week rooms, in the Fall, Winter and Spring by 80% to 90%, and comps over 50% of its rooms, food and beverage revenues, annually.

The answer is to follow the lead of the Las Vegas Strip, that has become the top convention/ trade show destination in North America. The 23 largest Strip properties enjoyed an occupancy of 92.1 % at an average rate of $163, for their fiscal year end 6/30/16. Atlantic City Boardwalk casino resorts only reached 77% occupancy at an average rate of $92, during the calendar year 2016, and that included comping over 50% of the rooms, and severely discounting them another 200 mid-week nights a year.

With Pennsylvania, New York and more recently, Maryland, adding casino resorts; Atlantic City needs more air service into AC International, which will improve our chance of attracting the convention trades, plus it will open new casino markets, that are out of reach of line run buses.

Without enormous inflation, I doubt that AC will ever again see $5.2 billion in casino win; but if we can fill off summer mid-week rooms with full rate business, then we will have profitable departments, outside the casino.

Last year Strip resorts counted on the casino for less than 35% of their total revenue, where Atlantic City is still at 70%. But the Strip properties are making 73% of their overall profit from their rooms, food, beverage and convention departments, and only 27% from their casinos.

With still a lot of same day drive in business; on weekends, it’s unlikely that AC, will ever see its other departments reach 65% of a casino resorts total revenue; but I could see the hotel departments producing as much as 50% of an AC’s casino resorts earnings.

By refusing to allow one or two casinos in North Jersey, we are just helping Pennsylvania and New York; not saving Atlantic City.

Steve Norton

  • Chairman/CEO at Norton Management LLC
  • Former President/COO at Argosy Gaming Co.
  • Former President / CEO at Gold River Resort and Casino
  • Former President/COO at Las Vegas Sands
  • Former Executive Vice President (EVP) at Resorts International, Inc.

4 thoughts on “Norton on Atlantic City Casino Industry: NJ Made Bad Mistake.”

  1. Mr Norton i said before I agree, NJ needs to have Vegas’s philosophy by building more air service to AC for more and bigger conventions to pack the town in the winter months. I disagree with you and the politicians with building casino in north jersey, that will kill the AC golden goose. The politicians need pass law disallowing deed restrictions on those closed casinos, Lobby Trump to allow sports betting that will help quite abit.

  2. Why so much focus on a single industry? There is more to Atlantic City that needs attention. Instead of excluding families as casinos do, why not focus on making the city more family friendly? With so much alcohol and a proposed open container proposal for the boardwalk? No wonder families choose other places in which to vacation. How about cleaning up the streets? How about tearing down antiquated sub standard housing? How about, instead on focusing on typically low pay hospitality jobs, focus on higher wage jobs in this city? From far away and up above, the city looks great, but once inside its borders, its a messy unappealing eye sore of a city. Does any one give a crap? Don`t ask any politician because they are only self serving. And, what`s to become of the 30% of the population who are property owners in the city who struggle to pay the taxes for the renting other 70%? You politicians amaze me with your greed and short sightedness. You turned a once classy town into a refuge for homeless people, drug addicts, unemployed, and have allowed a “me first” industry to take control of the city`s and state`s finances. But have no fear, a rising tide will eventually solve all our/your problems.

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