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AC Casino Patronage Dips

Posted on December 9th, 2010

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Casinos in Atlantic City are suffering from the economic recession that started years ago. Indeed, their plight is what prompted legislators and state officials to restructure the whole system of the city in order to revitalize the ailing casino industry along with countless others. But a recent statistical study has proven that the casino industry in Atlantic City has not yet recovered from the slump. The same study shows that people spend less time and money in AC casinos—22 percent and 30 percent less respectively. This figure is not just reflected in pieces of paper—in fact, regulars have noticed the changes. Regular Casino goer, George Cosgrove, reportedly said that the difference from last year and this year’s number of customers is alarmingly obvious. He said “It’s easy to see for yourself — go in there, and there’s hardly anybody in there. There’s probably half of what there was on a weekday a year ago. The business is just not there.”

The more devastating news is that with such a dramatic drop in patronage, an even more bigger drop in spending is seen from what little is left of the customers. A 30 percent drop in casino spending form a 22 percent reduced patronage is a very hefty number. Those who reports of still spending time at casinos admit that they would really want to spend as much as they used to but they realistically can’t anymore. The study was conducted by Spectrum Gaming Group, and was headed by Michael Pollock. Pollock said “It’s shifting toward a visitor base that is less gambling-centric, which means they’re gambling less per hour with tighter wallets. Recessions end, and when it does, what Atlantic City needs to do is diversify its customer base.”

Mr. Pollock said that the best time for the Casinos were just before the recession hit, 2006 and 2007. According to him, “”People were spending more than they could afford.” But of course, things have changed since the recession began in early 2008. That is why the study started comparing figures since 2006, the apex of the casino industry’s performance. The study divided Atlantic City’s casino industry into four groups—the casinos in the marina district, the casino in the Inlet section, the midtown casinos, and the Hilton and the Tropicana Resorts—and studied figures for each. The worst performing group are the casinos in the Inlet section, with its revenue per visitor hour dropping to almost 50 percent. The casinos in the main district fared a little better but still had devastating losses with a drop of 41 percent in revenue per visitor hour. The Hilton and Tropicana Resorts held their ground fairly well with only a 26 percent drop. The midtown casinos, however, did extraordinarily well considering the economic context, reporting an 11 percent increase in revenue per visitor hour.

Don Marrandino, eastern division president of Caesars Entertainment Corp, believes that the situation has changed in Atlantic City. In order for the casino industry to survive, they must adapt to the needs of the current client base. He said that people are spending more money on conventions rather than on gambling. Marrandino said that with that, the casinos should be able to take advantage of the situation saying that “We have to continue to expand the amenities we offer and do a better job in the convention business,”. He further added “Some of the drop in spending is due to the recession, and we should get some of that back. But to make up for the lost revenue from gambling, we have to make more money from our nightclubs, food and beverage and convention business.”

Atlantic City, though, is not alone in its plight. The casino industry in Las Vegas is also underperforming. The drop in customers has prompted many casinos in Las Vegas to lower their room rates in an attempt to make up for the loss of patronage. Although revenue per visitor hour data is not available for the casinos in Las Vegas, there is still no denying the fact that their revenues have dropped. Analysts believe that most of what is happening is mainly caused by the recession, but they commented that it would be pertinent for the casino industry to expand their other amenities once recovery takes place because according to them, the industry will never be the same again.