orgata Hotel Casino & Spa was the only casino to report an increase in profits in the second quarter: It earned us$ 49.8 million, up 7.8 % from 2008. While eight of the other resort casinos managed to stay in the black, losses were posted by two of them: the Atlantic City Hilton Casino Resort and Resorts Atlantic City, which lost us$ 603,000 and us$ 1.8 million, respectively.
The financial outlook has been especially bleak at Resorts, which had not made a payment on its us$ 360 million mortgage since October. The Press of Atlantic City reported last week that a group of lenders is proposing to take over the casino - which would be a first in Atlantic City's gaming history.
Profits have continued to slip in Atlantic City as the recession has clamped down on discretionary spending by gamblers and newer slot parlors in Pennsylvania have grabbed customers from the feeder markets of New York and northern New Jersey. The new offerings include the Sands Casino Resort, which opened in Bethlehem in May.
For the first six months this year, Atlantic City's gross operating profits fell 29 % from the previous year, totaling us$ 349.6 million. In the same period, net revenues decreased nearly 16 % to us$ 1.9 billion. Gross operating profit is considered the best way to measure a casino's financial strength as opposed to net income, which can be skewed by debt payments, tax considerations and other temporary costs.
The Casino Control Commission reported that the resort's 11 casinos had a net loss of us$ 591.6 million in the second quarter and a net loss of us$ 683.2 million for the first half of the year.
But Atlantic City is not the only major gambling market under pressure. Gambling revenue in Las Vegas slipped 15 % in June and 15 % for the first half of 2009. For Harrah's Entertainment, which owns four properties in Atlantic City, its Las Vegas revenue fell 19.2 % in the second quarter from the same period in 2008.
Atlantic City casinos did manage to increase the number of occupied room nights by 2.7 % in the second quarter. But with the addition of almost 1,000 more hotel rooms from a year ago, the overall occupancy rate fell to 84.6 % from 91.3 %, the Casino Control Commission reported.
In a note to investors last week, casino analyst Dennis M. Farrell Jr., of Wells Fargo Securities, said that Atlantic City will continue to face "a challenged environment." "Longer term, Atlantic City faces the risk of legalized table games in Pennsylvania and sport betting and table games in Delaware," Farrell wrote.