Atlantic City (AP) — Two Atlantic City casinos, blaming increased competition and a partial smoking ban for sinking profits, are offering buyouts to managers to avoid layoffs, according to a published report today.
The president of Resorts Atlantic City and Atlantic City Hilton, both owned by Colony Capital of Los Angeles, said the managers are being offered one week’s pay for every year of service with the casinos.
„The Atlantic City casino industry is facing its most difficult economic times since the inception of casino gaming,“ Tony Rodio, regional president of the two casinos, told The Star-Ledger of Newark in a story posted on the newspaper’s Web site.
„Increased competition in Pennsylvania, New York, and other nearby states, coupled with the devastating impact of a 75 percent smoking ban in the casino are factors which (have) the industry on pace for its first-ever year of revenue decline,“ Rodio said. „In fact, we estimate that this partial smoking ban has resulted in USD 1 million in lost revenue per month at Hilton and Resorts combined.“
The partial smoking ban began April 15. Earlier this month, Donald Trump, whose company has three casinos in the city, urged the City Council to repeal the ban. Casinos were excluded from a statewide ban on smoking in public places that took effect last year, prompting the council to enact a local ordinance.
Last week, state regulators announced quarterly net income at Atlantic City’s 11 casinos fell 34 percent, giving the industry its second consecutive quarterly drop. The state Casino Control Commission also reported net revenues fell 6.1 percent and gross operating profit dropped 19 percent in the quarter for the seaside gambling halls.
All 11 casinos saw declines in gross operating profit from the spring quarter a year ago, with the Atlantic City Hilton registering the largest drop, 44.9 percent, to USD 8.7 million.
Gross operating profit, which excludes interest, taxes, depreciation and other charges, is considered a better comparison between casino properties than net income.
Analysts agree the Atlantic City casinos have been hurt by competition from new slot parlors in New York and Pennsylvania, and 2007 should be the first year of falling revenues since casino gambling started in Atlantic City in 1978.