New Competition Threatens Atlantic City Casinos
Atlantic City, N.J., began 2014 with a dozen casinos and lost four during the year, with three on the verge of joining them this year or next. The city has lost about 8,000 jobs and could lose even more, according to a new report from Moody’s Investor Services.
By the end of 2018, eight new casinos are expected to open in the New York, Massachusetts, Pennsylvania and Maryland. The new competition for gamblers is likely to compress revenues for the Atlantic City operations. The first shot across the bow will come in the fall of 2016 when the MGM National Harbor is scheduled to open in Prince George’s County, Md., near the nation’s capital.
CNNMoney noted that the surge in building new casinos is driven by more state governments issuing gambling licenses as the states compete with each other to keep casino tax dollars at home. Ohio, for example, has approved 11 casinos since 2012.
Atlantic City’s casino revenues in 2014 totaled $2.74 billion, a drop of 4.5% from 2013 and a 48% drop from 2006, the city’s best year. In 2014, the Atlantic Club, the Showboat, Trump Plaza and Revel all closed. So far in 2015 the Trump Taj Majal, Caesar’s and Bally’s have filed for Chapter 11 bankruptcy protection.
Moody’s also suggests that the eight new casinos scheduled to open in the next few years will need to purchase 20,000 new slot machines. That should boost sales for suppliers like International Game Technology PLC (NYSE: IGT), Scientific Games Corp. (NASDAQ: SGMS) and Australian firm Aristocrat Leisure.