Atlantic City open for business

Actually, a few hardy souls — like fearless restaurateur Montgomery Dahm, who was semper fidelis to his fellow citizens — never closed. Add Tun Tavern to your list of must-see stops when you visit Atlantic City. Ditto Ducktown Tavern & Liquors, which hung tough in the face of Hurricane Sandy. However, although casino owners have may have privately chafed, the State of New Jersey proceeded methodically before giving gamblers the “all-clear.” While the casinos rode out the storm safely, the remainder of the city has been badly pummeled.

Yesterday, Gov. Chris Christie (R) held off, wanting assurances that the water was potable and understandably feeling leery to turn the slot machines back on while Atlantic City residents remained in the dark. Early this morning, Christie gave his assent … although a variety of complications (access, traffic, storm damage) will make for a staggered reopening. Ninety minutes later, the Golden Nugget was back in operation. In somewhat questionable taste, Nugget ownership blasted an e-mail trumpeting the news. By now, Borgata should be in operation as well.

Bond traders who handle Borgata notes ought to stop panicking over Sandy-related business disruptions and maybe start panicking over far worse than expected cash flow in 3Q12, so low it threatens some of Borgata’s loan covenants. The damage from new competition at Revel has been worse than expected but had been hidden below the waterline (i.e., EBITDA) while we were parsing gross revenue numbers instead.

While Wall Street has its hair on fire about five days of lost revenue, some are taking the longer view. Surrounded by some much damage, disruption and impending repair, casino owners are bracing for a long-term reduction in consumer spending. Tropicana Casino & Resort General Manager Steve Callender voiced the heretofore unspoken truth: Atlantic City could be facing a lost fourth quarter. “It could take a month. It could take two months,” he told The Press of Atlantic City. “A lot of discretionary dollars are at stake when people need to get their homes and cars fixed.” Worst-case scenario, the casinos may still cross the threshold at which their business-interruption insurance begins to cover losses.

But it’s a truly ill wind that doesn’t blow somebody some good. In the case, it filled the sails of Foxwoods Resort Casino and Mohegan Sun, two casinos that could use the extra business. Area punters decided to hunker down in casino hotels, providing an uptick in casino-floor action.

Election Update: A ballot initiative to permit slots at Naples Fort Meyers Greyhound Track looks like a shoo-in … provided that voters have the stamina to wade all the way through this year’s ballot, since the gaming question is stashed at the very end.