Wednesday, March 23, 2011

PA to Overtake Atlantic City in Casino Revenue

Press of Atlantic City: Pennsylvania’s surging gaming industry will probably overtake Atlantic City next year as the nation’s second-largest casino market, Wall Street analysts predicted Tuesday.

Pennsylvania has been growing by double-digit margins at the same time that Atlantic City’s gaming revenue has plunged 30 percent since peaking at $5.2 billion in 2006. Pennsylvania’s 10 casinos, which are spread across the state, took in about $2.5 billion in revenue in 2010, compared to $3.6 billion for the 11 gaming halls in Atlantic City.

As Atlantic City continues to decline, it seems inevitable that Pennsylvania will become the next $3 billion market and should surpass New Jersey for the nation’s No. 2 spot in gaming revenue behind Nevada, analysts told an industry conference.

“Pennsylvania gaming, sometime next year, will most likely be bigger than Atlantic City,” Andrew Zarnett, managing director of Deutsche Bank, said during a panel discussion at the Pennsylvania Gaming Congress.

Zarnett and other Wall Street observers believe Atlantic City will continue to struggle as competition intensifies in the Mid-Atlantic gaming market, including the opening later this year of a new slots parlor at New York’s Aqueduct racetrack.

Even the opening next year of the $2.4 billion Revel casino may not be enough to reverse Atlantic City’s slide, the analysts stressed. Revel, a Las Vegas-style megaresort, is being counted on to draw high-end customers and more conventions.

“I think Atlantic City will fight back a little bit with the opening of Revel,” said Christopher Jones, a director at Telsey Advisory Group. However, Zarnett contended that Revel will not expand the market overall. He warned that Revel may cannibalize a large piece of the marketplace from the existing casinos.

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