Atlantic City Q2 casino revenue down, profit up; MGM clears relicensing hurdle

atlantic-city-mgm-resortsAtlantic City casinos generated 3.5% less revenue in the first six months of 2014 than they brought in during the same period last year. Figures released on Friday by the state Division of Gaming Enforcement (DGE) showed overall casino revenue through June 30 was $1.88b. Gaming revenue was down 3.8% to $1.32b, room revenue fell 3.3%, food & beverage slipped 3.7% while entertainment & other revenue rose 1.5% to $86.4m.

On the plus side, hotel occupancy in the second quarter was up 4.9 points to 83.3% and total gross operating profit rose 34.9% to $83m, reflecting this year’s addition of online gambling revenue and suggesting the casinos are getting better at squeezing every nickel. However, more than half ($43.2m) of those profits were enjoyed by AC’s market-leading Borgata property, which benefited from a recent $88m favorable tax settlement with the city, over $11m of which was booked as revenue in Q2.

Of the three casinos set to close their doors before the end of September, only the Showboat finished the quarter in the black. The Showboat posted a profit of $7.6m, down from $9.5m during the same period last year. Meanwhile, the Trump Plaza lost $3.3m compared to a $143k profit last year, and the bankrupt Revel lost $24.3m, better than the $43.7m loss in Q2 2013.

New Jersey Gov. Chris Christie has scheduled a Sept. 8 meeting with city officials, casino operators and labor unions to discuss ways of righting AC’s sinking ship, but the thousands of casino staffers who will soon be out of a job are seeking help from a higher power. On Wednesday, the Atlantic City Fellowship of Churches organized a prayer rally at which Rev. Eric McCoy asked God to “open new doors” for AC’s soon to be unemployed masses. McCoy said the Almighty “had plans for us before casinos existed and he’ll have plans for us after they’re gone.” Plans, just not jobs.

Atlantic City may soon be welcoming MGM Resorts back to the fold. The casino operator, which shares ownership of the Borgata with Boyd Gaming, has been trying to revive the casino license it voluntarily surrendered in 2010 after New Jersey gaming regulators objected to MGM’s Macau joint venture with Pansy Ho, daughter of Stanley Ho, whom the regulators accused of having links to triad activity. MGM put tis 50% Borgata stake into trust while it looked for a buyer but MGM formally applied to have its AC license reinstated in February 2013 after Pansy reduced her MGM China stake to a minority position.

This week, MGM and billionaire investor Kirk Kerkorian (who holds a 19% stake in MGM) paid New Jersey a $250k fine to settle claims related to former MGM board member Terry Christensen, who was convicted in 2008 for his role in the illegal wiretapping of Kerkorian’s ex-wife. Christensen had continued to work as an MGM consultant after resigning from MGM’s board in 2006 once the wiretapping allegations came to light. MGM spokesman Alan Feldman told Bloomberg the fine was “simply an administrative means of closing a file on a previously resolved matter … in advance of our licensing hearing next month.”