Cash-strapped gamblers are going cold turkey in the recession, deserting their once-booming casinos, and leaving behind the wreckage of historic business flops and losses.
Donald Trump’s casino empire was among the latest to take heavy hits in the slowdown, posting sharp profit declines yesterday as an even worse earnings bloodbath slammed giant rival Harrah’s Entertainment.
Both companies blame their sudden reversals on the unwinding of the economy and vanishing gamblers who’ve cut back sharply on their leisure-time spending, at least at casinos.
“Our average spend per patron has fallen significantly during the fluctuations of the financial markets and gas prices,” said CEO Mark Juliano of Trump Entertainment Resorts.
Juliano said his employees are taking a 5 percent pay cut to help make ends meet at Trump’s Atlantic City casinos. At Harrah’s posh Borgato Hotel Casino about 400 workers were fired to cut overhead.
Casinos from Atlantic City to Las Vegas continue to reel from waves of new debt problems, painful cost-cutting and shutdowns of expsensive, half-built projects.
According to Bloomberg News, gambling revenue in Atlantic City, where all three of Trump’s casinos are located, fell 15 percent in September, marking the biggest monthly decline since gambling started there in 1978.
Meanwhile, another casino group filed for bankruptcy protection yesterday – the Diamond Palace Hotel & Casino in San Juan.
Earlier this year, Tropicana Entertainment LLC put its casinos into bankruptcy-court protection, while a deal to take Penn National Gaming private fell apart.
Las Vegas Sands Corp, which only last year opened the world’s largest casino, in Macau, said it is now fighting for its financial survival, and trying to find new backers. Its stock has tumbled by half and its auditor expressed doubts about Sands’ financial health.
Trump’s casinos posted a third-quarter loss of $139.1 million, or $4.39 per share – down sharply from a $6.6 million profit, or 21 cents a share, a year earlier. The big loss was due to writing down the value of the Taj Mahal casino. Revenue skidded to $198.3 million from $216.6 million.
Shares of the group, of which Trump owns 28 percent, tumbled to an embarrassing 55 cents.
Harrah’s seven Las Vegas and four Atlantic City casinos reported a third-quarter loss of $129.7 million, vs. a profit of $244.4 million a year earlier.
Harrah’s CEO Gary Loveman said the government’s planned economic-stimulus checks to consumers are a long shot for bailing out his industry.
Harrah’s has proven to be a big flop for private-equity firms Apollo Global Management and TPG Capital, which bought Harrah’s in January for $31 billion.
The Dow Jones US Gambling index has tumbled 77 percent from its all-time high in October last year, at the peak of the global gaming boom.