Last week Donald Trump wrote to Atlantic City Council criticising the smoking restrictions at casinos. Smoking areas must be limited to just 25% of the gaming area and by 15 September operators must submit plans for fully enclosed smoking rooms. According to Trump, this smoking ban was driving customers to go and gamble in jurisdictions where they can smoke. Gaming revenue in Atlantic City has already fallen nearly 4% so far this year.

The letter has angered some Councillors who are now talking of imposing a 100% ban on smoking, which if approved would make the smoking rooms obsolete. Donald Trump has been accused of blaming his own casino mismanagement (his casino companies have already been twice in bankruptcy courts and the latest Trump Entertainment Resorts is still making a loss) on the smoking restrictions.

Some Atlantic City residents are highly critical of the casino industry in New Jersey, pointing out that they pay just 9% of gaming revenue to the state. Last year Atlantic City casinos were closed when the city could not balance its budget and struggled to find necessary funds. Slots operations in Pennsylvania, which are already drawing players from the Atlantic City market, pay that state 55% of gaming revenue.

It cannot be disputed that the Atlantic City casinos carry huge overheads from non-gambling operations such as hotels and entertainment. The first slots operations in Pennsylvania have commenced with big advantages that may start to diminish when all the licences awarded by the state are functioning. The racetrack casinos mostly have infrastructure already in place and are functioning in low-cost temporary buildings whilst permanent facilities are under construction.

When some of the novelty status goes, the present high take per machine per day at the Pennsylvanian racinos could fall. In Florida, where the Seminole casinos have long been a feature, the machine revenue at the new pari-mutuel operations has been lower than anticipated. In the meantime Atlantic City casinos must work around the smoking restrictions and offer clients something better than they can find elsewhere. Revenue from table games (up 4.9% in July) and non-gambling activity is rising.

Atlantic City should weather the initial loss of gambling dollars to Pennsylvania and New York. 2007 may yet be the first year that revenue has fallen since the casinos opened in 1978, but the fall is expected be less than 5%. In 2006 New Jersey received US$417.5 million in tax revenue and another US$65.2 million went into reinvestment obligations. Atlantic City casinos will still be contributing many millions to the state coffers. (E-08.21.07)

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