Maryland gets in the gambling game - Thursday 6th of November 2008
Competition for gamblers just got a bit tougher.
Voters in Maryland, looking to boost their horse racing industry and provide some cash to schools, approved a measure on Tuesday to legalized slot machine gambling in five venues.
Although industry observers predict it will be three-to-four years before slot machines are operating in Maryland, the gambling parlors will ultimately give patrons a reason to wager closer to home.
Thats not exactly the outcome Atlantic City was hoping for. The market has taken a beating from competition in neighboring states. Slot parlors in New York and Pennsylvania caused revenue to decline last year for the first time since the first A.C. casino opened in 1978.
This year has been no different. For the first nine months, casino revenue has fallen 6.3 percent. In September, the market declined 15.1 percent, the worst year-over-year drop in its history.
October will bring little relief, as a full smoking ban took effect in the middle of the month. The ban will be partially lifted, to 75 percent of the casino floor, in mid-November.
Still, analysts were split on Marylands impact to Atlantic City, which is 117 miles from Baltimore.
In a note to investors, Deutsche Bank analyst Bill Lerner said "additional slot capacity in the northeast gaming market from Maryland could pressure existing gaming operators in Atlantic City and West Virginia."
But Robert LaFleuer, an analyst for Susquehanna Financial Group, said the impact is "probably minor."
Still, he said any additional competition is "certainly not helpful. But geographically they are somewhat distant, and youd have to drive through Delaware," where slot machine gambling already is offered.
Mark Juliano, CEO of Trump Entertainment Resorts, agreed.
"We dont like to see any new capacity come on to the market, particularly when the economy in general is as bad as it is," said Juliano, whose company owns three A.C. casinos. "But weve got to think three-to-four years from now, when it happens, well be in a much healthier environment. And quite frankly, I cant imagine Maryland will be as impactful as Pennsylvania."
Juliano also said that Maryland is too far from A.C. "to have an enormous impact, but it will have some."
"It continues to reinforce what weve been saying all along," he said. "Atlantic City has to morph into a full blown destination, because these little slot parlors are going to keep popping up here and popping up there. What we need to be all about is a full-fledged destination resort."
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