AC casino executives see pluses, minuses with planned new resorts

John Curran

Tuesday, March 27, 2001 | 10:38 a.m.

ATLANTIC CITY -- New Jersey casino operators are expressing both optimism and trepidation about the prospect of welcoming new players to their game.

The addition of the Borgata and an MGM MIRAGE casino should help bring new visitors to Atlantic City but will also cause defections -- of gamblers and casino employees -- from the existing casino hotels, executives said during a panel discussion this month.

"The biggest question I would try to answer is how much will a new property grow the market and how much will it cannibalize the existing operations?" said Robert Boughner, CEO of the Borgata.

The impending entry of the Borgata -- a 2,010-room mega-casino now under construction -- and a companion marina district casino planned by MGM MIRAGE of Las Vegas will mean trouble for existing casinos, some of which are already fighting for their lives.

Atlantic City hasn't opened a new casino hotel since Trump Taj Mahal in 1990.

When the Borgata opens in 2003, it is bound to lure curious gamblers away from other casinos, casino executives said during the panel discussion at Business Expo 2001, a trade show sponsored by the Greater Atlantic City Chamber of Commerce.

"We're going to be competing very aggressively for each other's customers," said Frank Bellis, CEO of the Claridge Casino Hotel.

Many of the Atlantic City casino industry's 47,049 employees, too, might be switching teams.

The casinos are already hard-pressed for labor. Thousands of low-level jobs are vacant at any one time, and the addition of up to 6,000 positions at the new casinos will exacerbate the problem.

"It's going to cause some chaos in the labor market," said David Jonas, senior vice president and general manager of Harrah's Atlantic City. "Where are we going to get these people?"

Boyd Gaming Corp. of Las Vegas, which is building the Borgata with MGM MIRAGE, has already received thousands of unsolicited "expressions of interest" from would-be employees, Boughner said.

Holding onto good employees could be costly for the casinos, chipping away at their bottom lines, according to Marc Falcone, a Bear Stearns analyst who moderated the discussion.

"If the glut of positions in the service and maintenance sectors of the business remain unfilled, we believe that customer service could suffer," according to Falcone. "In addition, as new supply comes on line, competition for qualified employees could intensify, causing wage acceleration."

In addition to needing more workers, the casinos need more hotel rooms if they are to continue to grow, the executives said.

Historically, Atlantic City has been a day-trip market, with most gamblers arriving by car or bus and staying only about five hours. But casino customers, as a rule, gamble more when they stay overnight.

Plenty of them want to. But the casinos' inventory of hotel rooms -- now 11,376 -- isn't big enough to accommodate the demand.

With citywide occupancy rates at 94 percent, new customers who want a room for a night are routinely turned away because casinos give the rooms for free to gamblers they know will spend money in the casino.

Last month, Harrah's turned away 40,000 room requests, Jonas said.