Borgata Wins Over Atlantic City

The splashy debut of the Borgata, the first new casino to hit Atlantic City since the Trump Taj Mahal opened its doors in 1990, highlights the difference between the gaming center's past, which catered to an older crowd arriving on charter buses, and its future, which is targeted at a younger crowd willing to spend money away from the gaming floor.

"Atlantic City got the reputation from the bus traffic coming in, but the Borgata is able to survive without it," said Linda Kassekert, chair of the New Jersey Casino Control Commission. "There was that history based on the Frank Sinatras and the guys that frequented in the past, but things are changing now. The Borgata is a much younger crowd, and that's helping."

While Atlantic City has always been big with gamblers, with annual revenue growth around 3% over the last decade, the lack of new glitz has left it somewhat moribund compared with the Las Vegas Strip. Since 1997, in terms of total gaming revenue, Atlantic City's 11 casinos have trailed the 40-plus casinos on the Strip, but not by a wide margin. In 2003, Atlantic City racked up $4.5 billion in gaming wins to the Strip's $4.8 billion.

But Las Vegas trumps Atlantic City in terms of non-gaming revenue, racking up more than half of its business from entertainment, shopping and dining. The Atlantic City market, however, generates between 10% and 20% of revenue from non-gaming business. Furthermore, there aren't enough hotel rooms in Atlantic City, which has 105,000 fewer rooms than the Strip. As a result, hotels are often at 90% occupancy even in off-peak season.

Business at the Borgata is so good that the casino and hotel operator said it has been turning away business. And while Borgata's parent companies have plans to expand their individual empires, with Boyd's announcing a deal to buy Coast Casinos and MGM Mirage moving into the U.K. market, they're not neglecting the Borgata. The companies plan a 500,000-square-foot expansion of the casino on 95 adjacent acres that MGM owns.