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.

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