“Hey, Buddy, got a light?”


Atlantic City is grabbing headlines again, but this time it is not the casino revenue doing the grabbing.  After years of decline, Atlantic City casino revenues casinos no longer garner much attention outside of New Jersey.  In fact, there are several locations in Pennsylvania that had a much worse February than Atlantic City.  And the formerly largest and most profitable casinos in the country, Mohegan Sun and Foxwoods were down over 20 percent.  At that rate, New Jersey’s bad revenue news is hardly news at all.

 Table games gross revenue at Presque Isle Downs & Casino dropped 46.8 percent in February compared to the same month in 2012. Presque Isle Downs brought in revenue of $1.27 million compared to revenue of nearly $2.4 million in February 2012. John Guerriero, Erie Times-News, 3-18-13

The Meadows Racetrack & Casino in western Pennsylvania was down nearly 35 percent, to $1.9 million. Parx Casino in Bensalem, which is in the crowded Philadelphia market, was down 17 percent, to $8.2 million. Patrick Walters, Associated Press, 3-18-13

Connecticut’s two resort casinos raked in about 20 percent less in slot revenues in February, where they faced a blizzard and had one less day to make money. Hartford Business Journal, 3-15-13

The events in Atlantic City now making headlines are fantasy sports and a change in management at Revel.  First the sports.  The Division of Gaming Enforcement is taking the lead and fighting back against the courts and the professional sports leagues in the battle over sports wagering.  The DGE unilaterally decided to permit and regulate fantasy sports within its Boardwalk Empire and the DGE will permit fantasy sports participation online.  Interestingly, the DGE says it will not be gambling.

 “This is an alternative,” Joe Brennan, director of the Interactive Media Entertainment Gaming Association, said of the state’s new fantasy sports regulations. “The leagues can’t argue against it, because they lobbied so hard for it.” Press of Atlantic City, 3-19-13

“The casinos could do this on the Internet. Our regulations allow it to be done that way. Because it’s already allowed online, there’s nothing specifically stopping the casinos from taking this online.” Associated Press, 3-19-13

Who knows what this means or where it will lead?  Not me, but I do think New Jersey is throwing down the gauntlet.  The state is appealing the U. S. District Court ruling that declared sports betting is in violation of federal law; the judge sided with professional and amateur sports organizations in opposing New Jersey’s law authorizing sports wagering.  Governor Chris Christie has made sports wagering one of the cornerstones of his attempts to resuscitate the choking casino industry in Atlantic City and is not going to give up easily.  Now, it appears that the agency regulating the industry is going to join the governor in the fight.  This shaping up to be a battle of giants and reminiscent of the times when the state of Nevada took on Attorney General Bobby Kennedy.

 Atlantic City casinos will be able to offer fantasy sports betting online and in person under a pilot program announced by state regulators.  Although one goal of the pilot program OK’d by the state Division of Gaming Enforcement on Monday is to bring more foot traffic into the casinos, the gambling halls can also choose to offer the bets online or through mobile devices. It is just the latest in an ever-expanding array of gambling options New Jersey is seeking to approve in order to help the struggling Atlantic City casinos…But, should they choose, the casinos also have the option to offer the fantasy games online individually or by partnering with established fantasy sports website companies. Wayne Parry, Associated Press, 3-19-13

Denied the chance to authorize sports betting, New Jersey is turning to a similarly popular activity that carries little risk of being challenged in court, observers said. The Division of Gaming Enforcement published temporary regulations Monday authorizing casinos to operate fantasy sports tournaments, allowing them to charge patrons an entry fee and pay out winnings through the casino cage similar to what gamblers of slot machines and table games experience but with one key difference. The activity is not considered gambling. Hoa Nguyen, Press of Atlantic City, 3-19-13

Joining the crowd on the sidelines watching the battle will be the new CEO of Revel, Jeffrey Hartmann.  Hartman has been picked to replace Kevin DeSanctis and lead the company into and hopefully out of bankruptcy.  The challenges are momentous – even with a restructured debt Revel has a long way to go before it will generate a profit.  Hartmann is a finance guy by trade, which means his strength will be on the cost side of ledger – reducing spending.  That is going to be very important, especially to the lenders who would like to receive some payment and be able to get back a little of the money they have lost.  They are trading much of the debt for equity; equity is a good trade only if the asset has any equity value and right now Revel is not a high-value asset to put it mildly.

 “Anybody is going to face a difficult if not impossible situation with Revel,” said Clyde Barrow, author of the New England Casino Gaming Update, an annual report of the regional casino industry. “You’re either going to come out of it as a hero turnaround artist or you’re going to fail.” Press of Atlantic City, 3-17-13

 The former president of the Mohegan Sun casino resort was approved to serve as the new interim CEO of Atlantic City’s Revel casino.  The New Jersey Casino Control Commission gave Jeffrey Hartmann the green light to run the day-to-day affairs of Atlantic City’s newest casino. Revel expects to file a Chapter 11 bankruptcy petition on Friday… “I am delighted to officially transition into this new role,” Hartmann said. “As the premier resort destination in the Northeast with expanding dining, gaming, and entertainment options and employees dedicated to providing guests a signature Revel experience, I see substantial opportunity, working with our Revel professionals, to drive growth. The financial flexibility our balance sheet restructuring will provide Revel with will enable us to execute our business objectives and improve operating cash flow over the coming months.”  The pre-packaged Chapter 11 bankruptcy filing will wipe out about two-thirds of Revel’s $1.5 billion in debt and give lenders a greater equity stake in the resort in return. Wayne Parry, Associated Press, 3-19-13

Reducing expenses will help, but by itself will not solve the problem.  Any business, casinos included, only generates a profit from the difference between revenues and expenses.  At the rate Revel is generating revenues there is no room for profit. That, in my simplistic way of viewing the world, means finding ways to generate more revenue, lots and lots more revenue is essential.

Since Revel opened less than a year ago, Revel has been at the bottom of the revenue chart in Atlantic City.  The newest and most expensive casino has been in 10th place on average, 10th out of 12, not good.  How, an innocent bystander might ask, is that possible?   In a town where you can buy an existing casino for $30 million or less, Revel cost $2.4 billion dollars to build;  it generates $10 million or so a month in revenue – something is obviously wrong, very wrong.

What could it be?  Is the building too tall, is it the wrong color, are the employee uniforms off-putting, are there no slot machines inside?  What could it be?  Try smoking or rather try not smoking.  Revel is the only completely non-smoking casino in Atlantic City – not a good position.  The newly created CEO, Jeffrey Hartmann, may have to face the possibility that the non-smoking policy is the problem.  Reversing that policy will not be easy.  Revel is unique and has positioned itself as being different from the rest.  Revel instituted some unique polices that if it had been successful would have revolutionized the industry.  However, Revel is not a success, so it is my guess that some of those revolutionary policies will have to be reversed.  “Hey, Buddy, got a light?”

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2 Responses to ““Hey, Buddy, got a light?””


  1. 1 rexdstock1 March 19, 2013 at 8:03 pm

    Clyde Barrow? What costs can they reduce that won’t slaughter them in terms of the elegant player? Did that die with Kev?

    Sent from my Verizon Wireless Droid

  2. 2 rexdstock1 March 20, 2013 at 5:46 pm

    The issue of fantasy sports betting is hilarious given it is an activity that already exists and doesn’t need some knucklehead from AC making it a bad experience…  Cynical, eh?

    >________________________________ > From: ADAMS – GAMING BUSINESS REVIEW >To: rex@stockanswer.com >Sent: Tuesday, March 19, 2013 6:32 PM >Subject: [New post] “Hey, Buddy, got a light?” > > > WordPress.com >Ken Adams posted: “Atlantic City is grabbing headlines again, but this time it is not the casino revenue doing the grabbing.  After years of decline, Atlantic City casino revenues casinos no longer garner much attention outside of New Jersey.  In fact, there are several loc” >


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