Atlantic City Numbers Game: Nuggets of Success, Part 2

As pointed out in my previous post in the series, total casino 'win' was down 7.8% in Atlantic City from Nov. '07 to Nov. '08.  With that context, I'm impressed that Borgata managed to keep its decrease to 2.9%.  Not as impressive as Harrah's increase, but still respectable in this tough climate for AC gaming.  Though Borgata made headlines a few months ago with its first-ever layoffs, the casino actually out-performed most of its competitors in a year-to-year comparison - at least in terms of casino 'win'.  So lets break down the numbers provided by the New Jersey Casino Control Commission, helpful as always.

Like Harrah's, Borgata's modest success stemmed from strategizing against type.  As Harrah's acheived its increased revenue from table games, Borgata offset the AC slowdown by increasing slots revenue.   Borgata increased its slots revenue by 3.2% in Nov. '08, the largest such increase of all the Atlantic City casinos.  In fact, Borgata was only one of two AC joints to increase slots revenue in this span & Harrah's increase was only .1% (though artfully done; see my previous post in this series).  In fact, Borgata's slots 'win' helped substantially to offset the casino's 12.4% decrease in table games 'win.'

An analysis of Borgata's slots formula showed that the casino increased its 'win' by adding more penny slot machines and making lots of money from them.  Between the two Novembers, Borgata increased its capacity of $.01 and $.02 machines by 33%, from 689 to 915.  The casino's enhanced penny slots sector won $9.4 million in Nov. '08, up from $6.5 million in Nov. '07 -- a 45% increase in the 'win.'  In Nov. '08, Borgata made over twice as much money from its penny slots than Harrah's and significantly more cash from these slots than any other casino in Atlantic City.  Its closest competitor in this category was Trump Taj Mahal, which made $7.4 million with more penny slots in operation (947).  By contrast, Bally's made $5.6 million from its penny slots in Nov. 08, even though it operated 988 of the machines-- somewhat more than Borgata.

Even more impressive, Borgata's 10.7% hold on penny slots tied Harrah's for the lowest in this category for Nov. 2008.  A penny slots hold increase of just 1 or 2% would have only brought it into alignment with the majority of AC casinos while increasing slots revenue even more.  The casino also added some "Multi-denominational" slots and made slightly more than $1 million more on them in Nov. '08, compared to Nov. '07.

The recent slots success at Borgata indicates that it is successfully appealing to traditional AC gamblers in addition to the upscale patrons that it is usually identified with.  It could also mean that Borgata's weekend hipsters have less disposable income but still want to have fun hanging out at the casino with the best image and slickest non-gaming attractions.  So, maybe they stretch their gambling dollars by playing penny slots rather than blackjack or craps.  This all gets back to the fact that the vast majority of casino patrons are in the casino to have fun through the whole casino experience: the post-Mirage Vegas formula for success, and the formula that Borgata has successfully transferred to Atlantic City. 

There is some irony that Borgata's gaming winnings have come increasingly from slots, given its leadership in the AC trend back towards table games over the past few years.  But, it is not surprising to me at all.  From the beginning, Borgata has had very effective gaming management and employed a careful strategy of employing Atlantic City veterans and others with solid expertise and backgrounds particularly catered to success in south Jersey.  They know how to evaluate Atlantic City's gaming culture, shift strategies as necessary and keep the gaming revenue flowing, even in hard times. 

Note: Of course I realize that a casino's overall well-being has to do with many factors besides the 'casino win.'  Finance, profitability, debt/asset ratio, local circumstances, EBITDA, etc. all play big roles & may very well be explored in later posts here at GA.