Is it possible to find a bright spot amid the drumbeat of dreary data for Atlantic City's casinos, hit by a prolonged slump that led to a 15.1% drop in revenue for the first eight months of the year versus the year-ago period?
The only good news for equity investors is that there aren't many equity investors affected by Atlantic City's woes. (Bondholders should be fretting, though.)
However, equity holders should be upset with the apparently healthiest casino, Borgata, which is owned by MGM Mirage
Collective revenue from the city's 11 casinos dropped 16.3% in August, affecting the many privately held properties, including four owned by Harrah's Entertainment, as well as three owned by the publicly traded but bankrupt Trump Entertainment.
Atlantic City is no different that any other venue that has been hit by cuts in consumer spending. The Las Vegas Strip, where MGM Mirage duels with Wynn Resorts
But Atlantic City faces challenges from neighboring states, especially as Pennsylvania adds more gambling sites, such as Las Vegas Sands' slots-only casino in Bethlehem. Experts say Pennsylvania is draining some gamblers from New York, Philadelphia, and northern New Jersey who might have traveled to Atlantic City. (Pennsylvania doesn't allow table games.)
Initial Bethlehem results look promising. The Sands casino, which opened in late May, reported $20.2 million in revenue in August. That was fifth among nine Pennsylvania commercial gambling outlets, most of which offer slot machines at racetracks.
More unwelcome news is on the way. Delaware just launched sports betting at its three racetracks -- including one owned by Dover Downs Gaming & Entertainment
In this environment, Atlantic City offers a lesson about other gambling towns, too, where flat or shrinking revenue is being split among a fixed or growing number of players. As for bond and stock investors, you don't have to bet against Atlantic City's casinos. You can simply bet around them.