Moody’s Says Casinos, Utilities to Suffer After Sandy
“We expect Atlantic City casinos’ earnings to drop by at least 25 percent, and they could decline by as much as 50 percent, in the next two quarters,” said Keith Foley, co-author of Moody’s “Hurricane Sandy’s Credit Impact.”
Consolidated Edison Inc. (ED), FirstEnergy Corp. (FE)’s Jersey Central Power & Light and Public Service Electric & Gas, owned by Public Service Enterprise Group Inc., will suffer lower revenue this quarter due to storm-related blackouts and restoration costs, Moody’s said.
Sectors that will receive a boost from the storm include building products, capital goods, consumer products and some retailers, Moody’s said.
New Jersey, with $3.3 billion in gambling revenue last year, is the second-largest U.S. gambling market after Nevada. Atlantic City’s 12 casinos closed Oct. 28 by order of Governor Chris Christie and reopened five days later.
The properties suffered minor damage and customers coping with the loss of electricity and other storm-related issues will limit business, Tony Rodio, chief executive officer of Tropicana Entertainment Inc. (TPCA) said in an interview today. Still, Moody’s estimated earnings declines are too severe, particularly for next year’s first quarter, he said.
Not as Dire
“I don’t think it’ll be as dire as Moody’s projects,” said Rodio, who also leads the state’s casino trade association. “We’ll have a better picture in a week.”
Gaming companies most at risk include Revel Atlantic City LLC and Marina District Finance Co., the Boyd Gaming Corp.-MGM Resorts International venture that owns the Borgata Hotel Spa & Casino. Caesars Entertainment Corp. (CZR) and Tropicana also have exposure, Moody’s said.
Tropicana gets about 25 percent of its profit from Atlantic City and has more cash than debt, Rodio said.
Rows of slot machines at Caesars’ Bally’s casino were vacant and a few dozen card tables were closed yesterday afternoon, according to a Bloomberg News report.
Tenyo Yovchev, who pushes tourists on a cart along the boardwalk, said he’d yet to have a single customer after an hour of waiting.
“Nobody’s here,” he said. “I’m standing here for nothing.”
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