Casinos post $328.2M. in profits - Friday 12th of August 2005

The casino industry slogged through a second quarter marked by chilly weather, a slump in slot play and slow profit growth.

Gross operating profits, also known as cash flow, totaled $328.2 million for the quarter, just 0.4 percent higher than the same period last year, according to figures released Wednesday by the state Casino Control Commission.

For the first six months of the year, gross operating profits fell 0.8 percent to $596.5 million. Operating profits - earnings before interest, taxes, depreciation and amortization - are closely watched because they are a key measure of the gaming industrys financial health.

The second quarter started with a strong April, but cold and rainy weather and a drop in slot revenue hurt results in May, followed by a lackluster June.

Seven of the 12 casinos suffered a decline in gross operating profits for the quarter. Atlantic City Hilton Casino Resort, Sands Casino Hotel, Trump Plaza Hotel and Casino and Trump Taj Mahal Casino Resort were the biggest losers. Each of those casinos also had a drop in second-quarter net revenue.

Standouts included Resorts Atlantic City, Tropicana Casino and Resort, Borgata Hotel Casino & Spa and Showboat Casino Hotel, each with double-digit gains in gross operating profits or net revenue.

Earnings at Resorts surged 89 percent to $12.9 million thanks to extra business generated by the casinos new 400-room hotel tower, which opened last summer. Resorts neighbor, Showboat, saw gross operating profits climb 13.9 percent to $38.5 million.

Tropicana continued to reap the benefits of The Quarter, the $280 million Cuban-themed hotel, retail and entertainment complex that made its debut last November. Once they were done shopping or eating at The Quarter, gamblers made a stop at Tropicanas slot machines and gaming tables, helping to push earnings up nearly 46 percent, to $31.8 million.

Borgata led the industry with gross operating profits of $58 million, an increase of 7 percent. Net revenue at Borgata jumped 11.8 percent to $184.4 million, also No. 1 among all casinos.

Robert L. Boughner, Borgatas chief executive officer, said the Las Vegas-style megaresort had strong growth in gaming and nongaming revenue for the second quarter and continues to post good year-over-year results in cash flow and net income.

"I think our business model and the manner in which our entire team executes the business model makes all the difference," Boughner said. "It is our successful hotel operations, restaurants and nightlife and a high level of return to our customers."

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