Gamblers keeping a tight grip on wallets in Atlantic City, study finds
People spend less time in casinos
ATLANTIC CITY — The amount of time gamblers are spending in Atlantic City casinos is falling, and they’re holding on more tightly to their wallets while they’re there.
A new study shows the amount of time gamblers spent inside casinos in the nation’s second-largest gambling market is down more than 22 percent, and the amount of money they spend is down almost 30 percent over the past four years.
And the hit to the casinos’ bottom line is substantial: gross operating profit per hour is down 61 percent.
George Cosgrove, a 69-year-old retiree from Whiting, N.J., comes to Atlantic City once a month with his wife, visiting a different casino each time. One day last week he was taking a break on a bench outside the Atlantic City Hilton Casino Resort, which hasn’t paid its mortgage in more than a year and a half and which reported $4.7 million in gross operating losses in the third quarter compared with a gross operating profit of $888,000 a year ago.
“It’s easy to see for yourself — go in there, and there’s hardly anybody in there,’’ Cosgrove, said, motioning to the Hilton.
Cosgrove estimates he and his wife are spending at least 30 percent less at the casinos this year.
“We are definitely watching our money more closely,’’ he said. “We’d love to keep doing things the way we used to, but we just can’t.’’
Michael Pollock, managing director of Spectrum Gaming Group, which wrote the study, said the numbers show just how drastically the Atlantic City market is changing.
“It’s shifting toward a visitor base that is less gambling-centric, which means they’re gambling less per hour with tighter wallets,’’ he said. “Recessions end, and when it does, what Atlantic City needs to do is diversify its customer base.
“We didn’t realize it at the time, but 2006 and 2007 in Atlantic City and Las Vegas was really too good to be true,’’ Pollock said. “People were spending more than they could afford.’’
That came to a screeching halt when the economy started slowing down in late 2007 and nearly crashed in 2008.
The study examined third-quarter figures from 2006 to 2010 in three areas: gross gaming revenue per visitor hour (the amount of money casinos take in for every hour a gambler is on their premises); total visitor hours; and gross operating profit per visitor hour.
The study’s starting point is late 2006, just before the first slot parlors opened in the Philadelphia suburbs, ushering in a four-year revenue plunge in Atlantic City that continues unabated.
Gross gaming revenue for the city’s 11 casinos fell from $9.13 per hour in 2006 to $6.42.
Gross operating profit per visitor hour went from $2.74 in 2006 to $1.05 in the third quarter of this year.
Corresponding hourly figures were not available for Las Vegas, the nation’s largest gambling market. But it, too, has been struggling with the recession and the expansion of casinos and slot parlors around the country.
Las Vegas casinos are lowering room rates to get people in the door, but visitors are still being tightfisted.
Gambling revenue in Clark County, Nevada, which includes Las Vegas, is up less than 1 percent to $6.7 billion from January through September. Meanwhile, the area saw a 2.4 percent increase in visitors during the first nine months of 2010 compared with the same time last year.
And 2009 was a similarly bad year: fewer people came to Vegas and they gambled even less. There were 3 percent fewer visitors than in 2008, and gambling revenue was down 9.8 percent.
Atlantic City’s casino revenue fell from a high of $5.2 billion in 2006 to $3.9 billion in 2009. For the first 10 months of this year, revenue is $3.1 billion, down 9.1 percent from the same period in 2009.
And a new PricewaterhouseCoopers LLP report released yesterday paints a grim picture for Atlantic City over the next five years, predicting that in 2014 revenue at New Jersey casinos will still be nearly 36 percent lower than it was in 2006.