Once a monopoly, Atlantic City now faces increased competition

Monday, May 11, 1998 | 1:03 a.m.

Now, 26 states have casinos. The competition - once limited to Nevada - is closing in on Atlantic City.

In 1992, the Mashantucket Pequot Indians opened Foxwoods Resort Casino in Ledyard, Conn., siphoning off some of Atlantic City's business.

In 1996, the Mohegan Sun Casino opened in Uncasville, Conn., further cutting into Atlantic City's market. That same year, Delaware lawmakers gave race tracks the go-ahead to install slot machines, giving millions of people in Maryland, Delaware and Pennsylvania a more convenient gambling outlet.

This year, competition inched even closer: Gambling boats began to sail out of New York City, evading the state's ban on casino gambling by cruising in international waters.

Casino initiatives have stalled in Pennsylvania and New York for the time being, but if casinos ever open in either state, Atlantic City would be the loser, experts said.

As much as 40 percent of the $3.9 billion won last year by Atlantic City casinos was from New York residents, according to Marvin Roffman, an industry expert and former consultant to the Casino Association of New Jersey.

"If New York ever got gaming, it would have very serious negative implications for Atlantic City. A huge percentage of the market comes from there," he said.

It's no accident that New York has been slow to act.

Donald J. Trump, whose Trump Hotels & Casino Resorts Inc. owns three Atlantic City casinos, has actively lobbied New York lawmakers against casino gambling.

In 1997, the state Senate rejected a proposed amendment to the state Constitution that would have allowed casinos in the Niagara Falls-Buffalo, Saratoga-Lake George and Catskill Mountains areas.

If the bill is not resurrected this year, the earliest a referendum could be held would be 2000. That would make it 2001 before the first non-Indian casino could open.

In Pennsylvania, Gov. Tom Ridge has said he would support a riverboat gambling bill if it includes a provision for a statewide referendum. But the Legislature has yet to pass a bill authorizing the vote.

Meanwhile, Las Vegas casino companies are betting on Atlantic City.

Mirage Resorts Inc., plans to build a $750 million, 4,000-room Las Vegas-style casino resort in the marina district. Observers believe Mirage, which helped key a Las Vegas resurgence with the dynamic Mirage and Treasure Island casinos, will build a must-see attraction that draws new customers to Atlantic City.

MGM Grand Inc., which owns the 5,005-room MGM Grand in Las Vegas, also plans to build here. The company is assembling land for a $700 million 2,000-room resort.

Sun International Hotels Ltd., meanwhile, is planning a $150 million make-over of Resorts Casino Hotel, which it bought in 1996.

The new developments will force the casinos already here to upgrade their offerings to compete with the newcomers, according to Michael Pollock, who writes a newsletter on Atlantic City casinos.

"Atlantic City's going to get to the point where it's no longer as vulnerable to threats from other jurisdictions," he said. "Today, it's not as vulnerable as it was five years ago, and five years from now it will be even less so."

Analysts who were bullish on Atlantic City in 1996 - when Mirage and others first announced their plans - have since cooled, citing delays in the projects and flat growth in the market.

"Atlantic City, as a market, has a window to try to move up and become more of a regional destination market by building new properties that attract new clienteles," said Joseph Coccimiglio, senior gaming analyst for Prudential Securities.

"Unfortunately, MGM has had delays in getting the land it needs and Mirage has had lawsuits from competitors, as well as squabbles with their own partners. Now, we're looking at early 2002 (openings) as a best-case scenario.

"There is a possibility you could have New York or Pennsylvania legalized in the interim. But those chances look relatively slim because the economy is so strong there isn't this driving need for tax revenues, which we had in the recession," Coccimiglio said.

Even if surrounding states were to legalize casinos, most observers believe Atlantic City's head start and the unique appeal of oceanfront casinos along the world-famous Boardwalk ensure its future as a casino mecca.

While riverboat casinos in Philadelphia could chip away at Atlantic City's base, they won't put the Boardwalk out of business, Roffman said.

"Riverboat gaming is never going to satisfy the appetite of patrons who've been to these billion-dollar (Atlantic City) complexes. If you live in Des Moines and have never been to a casino before, yes, it holds an interest. But once you've been to these big mega-stores, a riverboat isn't going to do it," Roffman said.

Adds Pollock: "You can't put the Atlantic Ocean in Philadelphia and you can't duplicate the Boardwalk anywhere."