Atlantic City: Revenues up, Seminoles out, Mohegans in

Stick a fork in the Dennis Gomes legacy at Resorts Atlantic City. Son Aaron Gomes is not only leaving but going halfway around the globe, to team up with former Borgata exec Larry Mullin and reboot Jupiters Gold Coast Casino, Down Under. He’ll have $625 million to spend on the Jupiters’ relaunch, which must feel like unparalleled lolly after having to reposition Resorts on a shoelace-and-chewing-gum budget. (Even Mohegan Sun‘s new cash infusion comes to a modest $35 million … actually more like $22 million-$26.5 million, once casino-tax money is recycled into the project.) Resorts A.C. owner Morris Bailey wanted Gomes to stay on but, with an offer like Jupiters’ on the table, who’s to blame Gomes for taking it? Besides, new plans like the incorporation of a Margaritaville restaurant into Resorts A.C. run a cart and horses through Gomes pere‘s Roaring Twenties theme.

New Jersey‘s freshly inked deal with Mohegan Tribal Gaming Authority lands the latter “a cheap foothold in the nation’s third-largest gambling market,” as Wayne Parry writes, mincing no words. Pending a more-thorough vetting by the state, MTGA will only have unilateral authority with regard to which games are on the Resorts floor and in what configuration. Any wider-ranging decisions require Bailey’s say-so, although the majority owner recently betrayed a measure of buyer’s remorse. This would appear to preclude the casino’s next CEO — as yet unnamed — from being plucked from within the Mohegan braintrust. Mohegan CEO Mitchell Etess makes an array of salient points regarding the deal, not least of which is that the worm has turned and tribal casinos are coming to the private sector’s rescue. After decades of disrespect, that’s a victory lap I shan’t begrudge him. However, having made a selling point of the lack of proximity between other Mohegan properties in Connecticut and Pennsylvania, the tribe’s play for a Massachusetts casino looks all the more cynical. (I’ve heard informed speculation that MTGA wants the Palmer, Mass., site simply to keep it in cold storage for years.)

Enter the Mohegans, exit the Seminoles. The Florida tribe’s attempt — in tandem with Och-Ziff Real Estate — at a Hard Rock-branded boutique casino was nearing a preposterous $465 million just to build 208 hotel rooms. Of the various rescue measures for Atlantic City passed by the New Jersey Lege, the “boutique casino” law was the only one foredoomed. No one even thought it worth the required $1 million in earnest money. Dr. David G. Schwartz saw the collapse of the Hard Rock venture coming months in advance, giving him the only clear crystal ball on the Boardwalk: When aging properties are changing hands for $35 million or so, where’s the percentage in building a mini-casino from scratch, at an exponentially higher price point? Although the law was meant to keep the cost of entry below $1 billion, a full build-out of Hard Rock to 850 rooms would have put that theory sorely to the test.

Ergo, the Seminole venture joints the abortive Curtis Bashaw–Wallace Barr casino in the pipe-dream graveyard that is the Boardwalk’s southern terminus. The official Seminole/Och-Ziff rationale was “current market conditions,” which is a nice way of saying that Revel lost $35 million in its first quarter and they’d be damned if they went that route.

Speaking of Revel, it’s an odd duck: a tide which lifts all boats save its own. Mind you, the Boardwalk enjoyed three more business days last month, not having hurricane-related issues with which to contend. However, let the record show that same-store revenues were up 5% and, once Revel is factored into the equation, Atlantic City saw an overall bump of 13%. Table game revenue was up, despite slightly lower drop, and slot play was much heavier (14%) than the year before.

Borgata enjoyed above-average slot revenue but poor hold made for a catastrophic (-27%) month at the tables. Even so, Borgata eked out a 1% revenue increase, continuing to outperform Wall Street‘s expectations of a post-Revel environment. Strong table hold helped push Caesars Entertainment‘s Atlantic City portfolio up 3%, mostly driven by Harrah’s Marina (+15%, right), despite mediocre slot numbers. Although Revel’s $20 million gross was unimpressive, to say the least, its curiosity factor redounded to the benefit of casinos up and down the market. Grind joint Atlantic Club shot up 25%, Trump Taj Mahal leapt 21% and Golden Nugget Atlantic City ascended 16%. Even Resorts snapped out of a six-month swoon, up 5%. Last-place Trump Plaza slowed its slide, down only 3% in August … a miracle by Plaza standards. According to one Wall Street analyst report, Revel is doing $175/slot/day and averaging almost $2K per table per day, poker rake excluded. Regardless of how the competition is faring, at $2.4 billion that’s precious little bang for the buck.