Category Archives: Business Articles

New York City’s Only Casino Experiences Rapid Success

Bart Bruschansky is used to being treated like royalty by East Coast casinos, especially in Atlantic City.  The 54-year-old retiree from Long Island was a regular gambler at venues such the Borgata Hotel and Trump Plaza. “Atlantic City was my niche,” he said. But it isn’t anymore, despite their best efforts. “Even now, for the past month, Borgata’s been mailing me offers for Norwegian cruises, gift bicycles , and $1000 to spend in the jewelry store” he said. “But I don’t go there anymore. Now I come here.”

By here, he means the recently opened Resorts World Casino in Queens, N.Y. Located next to the Aqueduct Racetrack in Ozone Park, the casino currently employs 1500 people, with approximately 40,000 people walking through their doors everyday.  Most of the people are former Atlantic City patrons who flock to the nearby casino from the neighboring New York boroughs Staten Island and Brooklyn as well as Long Island and New Jersey.

“It’s a more relaxed atmosphere here, you can get a table and play for a long time without anyone bothering you,” said Bruschansky, who comes to the casino at least four times a week, spending an average of $800 a trip. While that would barely get him noticed in a Vegas casino, here, Bruschansky said it gets him the VIP treatment. “They take care of anything I need here, comping my meals, extra gaming credit, access to the high-roller room,” he said. “I’m really satisfied.”

The attendance at the casino is an older crowd made up of plenty of retirees like Phyllis Binder and her husband Leon. The elderly couple are veteran gamblers who have played all over the country but are now content to make the half-hour drive from Staten Island to the casino once every week to play the slot machines. “The staff here are great, it’s always very relaxed and it’s nice to be in a place without smoking,” said Binder. “We usually spend the entire day here.”

The Queens casino lacks the fancy restaurants and décor of its competitors in Atlantic City.  It has no accommodations for its guests and currently visitors can only gamble on slot machines and electronic table games. Yet despite its dearth of amenities, it holds one key advantage. “This is the only casino in in New York City,” said Michelle Stoddart, the director of PR and Communications at Resorts World. “Proximity is what we’re selling here.”

By most accounts, people are buying what they’re selling. Since it opened on October 28, 2011, Resorts World has attracted hordes of gamblers from all over New York state. The Friday it opened, nearly 20,000 people showed up, creating a mile-long waiting line at the entrance as the casino quickly reached the 5000-person capacity on its main gaming floor, “Times Square” . It has since expanded its capacity adding another gaming floor and a high-rollers area.

The enthusiastic response has continued with the casino posting healthy revenue numbers, earning nearly $90 million by the end of last year. The casino’s owners; the Malaysian-based Genting Group are projecting annual revenues of nearly $400 million.  Ed Farrell, the chief financial officer of Resorts World said this was a conservative estimate.  “If you look at our most recent financial reports for the month and project it for the year, you’ll see that it’s closer to 600 million.”

According to the financial reports on the New York Lottery website, the casino has reported steadily increasing net revenues or “net wins” of over $50 million every month since the beginning of this year. Most recently it earned $59 million in the month of March. This figure reflects the total amount of money bet on all the games in the casino minus the total amount of money paid out to winners.

Resorts World has generated more revenue in six months than all but one of the other eight racetrack casinos or ‘racinos” in the state generated in a year. To add further perspective, in March, the average amount of money “earned” by each machine per day was $384, more than any other racino in the state.

In a time when the gaming industry is still reeling from the effects of the recession, it’s an impressive performance for a casino that has only been open for six months, “We always expected to do well,” said Farrell. “This is definitely one of the most convenient locations, in one of the most cosmopolitan cities in the world and we’re better than a lot of the aging properties in the surrounding areas.”

Farrell is a veteran of the gaming industry, having previously worked in the finance departments of the Mirage in Las Vegas and Foxwoods in Connecticut. He said New Yorkers were very different compared to other markets he had worked in. “New Yorkers are very worldly and much more aware of things,” said Farrell. “We had very limited pre-opening advertising or marketing but on opening day we had lines through the gate. Everything here spread through word of mouth, you don’t see that everywhere else.”

Farrell said the only thing holding back the revenues of the casino is the lack of table games. Gambling on live table games is currently not allowed under New York state law, unless it takes place in an Indian casino. Farrell said the availability of table games in this area would be “phenomenal” and would allow the casino to achieve revenues comparable to Las Vegas.

While not as spectacular or extravagant as some of the casinos in Vegas, Resorts World has spared no expense in making its visitors feel as if they are in a place of privilege.

From the outside, the massive structure looks like an enormous, peach colored warehouse, standing out against the dull background of the neighborhoods dull urban background. A longer than expected walk from the nearby A train station takes away some of the excitement but entering the casino makes up for this. Visitors are greeted with a brightly lit lobby and an impressive “Light of Nations” glass sculpture, which contains 193 hand-blown glass bulbs each containing the name of a country. An elevator leads to the Times Square gaming floor. This is the biggest gaming area containing mostly space-age-looking electronic slot machines. There are also the electronic table games including baccarat and roulette. Some of the machines have large garish signs with names like “Sex and The City” and “Cougarlicious”. Instead of uniformed dealers, there are large screens at each machine, displaying attractive women who virtually deal you your cards.

Unlike old-school casinos, the gaming floor has massive glass windows on one side, allowing plenty of sunlight and a beautiful view overlooking the Aqueduct race course. The most overwhelming sight is the giant LCD screen in the middle of the gaming floor. The screen is set to ESPN, and surrounded by a large semi-circular bar to serve the game-watching patrons.

The second gaming floor, “Fifth Avenue”, is situated at a higher level and it hosts the higher stake games. For the very high-rollers, there is the Crockfords Room, a private gaming area where player gets their own cashier, a private game machine and several amenities compliments of the casino.

Like most modern casinos and resorts, Resorts World also has a convention space, the 70,000 square feet “Central Parks Events Center”. Stoddart said so far the massive space had been booked out for private parties, awards ceremonies and conferences and they were looking to publicize it even more. There were plans for Genting to build a larger convention center right next to the Aqueduct venue to replace the Jacob Javits Center in Manhattan, but the effort was nixed after state lawmakers opposed it.

While there are currently no plans to build accommodations at the casino, the company has struck partnerships with nearby hotels to provide deals for returning visitors. It also regularly buses in visitors from the nearby boroughs and is currently involved in renovating the nearby “A” train station to make life easier for travelers.

The casino’s continued success isn’t just in the interest of the Genting Group. New York State has one of the highest tax rates on gambling in the nation, making casinos big revenue generators for the state. Resorts World gives 44 percent of its net revenue towards funding public education in New York state. This is typical of the nine racinos in New York State who use this fact to counter concerns that gambling promotes criminal or immoral activity in the areas it is established.

“People are loving the fact that education is benefitting from their spending money here,” said Stoddart.”A lot of people had objections in the beginning, but the feeling of pride for the community as well as the jobs we’ve created changed those attitudes.”

The New York Gaming Association (NYGA) represents the state’s nine racinos. They recently issued a press release that outlined their goal to publicize these contributions to New York.  “Our members are proud of our proven record of job creation and of the amount of money we are able to generate for education, each year,” said James Featherstonhaugh, president of the NYGA.  “Our racetrack casinos have provided entertainment and positively contributed to communities across the state for generations. Releasing these public service announcements reminds New Yorkers that our facilities ease the burden on local property taxes and are an important part of the fiscal equation that our economy depends on.”

New York governor Andrew Cuomo has also praised the success of the racinos. Speaking to the New York Daily News, Cuomo said the economic windfall that casino gambling would bring in is far more significant than a potential spike in crime or increase in gambling addiction that gambling critics are talking about.

Thanks to the efforts of Governor Cuomo, the New York state legislature approved a proposed constitutional amendment to legalize table games in the state. In order for this to take effect, the amendment would have to receive a second round of approval from the legislature. This would authorize gambling licenses for seven out of the nine New York racinos, allowing them to upgrade their services to include coveted table games such as blackjack and poker.

The NYGA welcomed the amendment in a statement. “Enhanced casino gaming offers our state the promise of enormous economic benefits, including the creation of more than 25,000 new jobs; the return of $3 billion to $5 billion currently spent each year by New Yorkers at casinos located elsewhere; and massive private sector investment,” said Featherstonhaugh.

However, not everyone is happy with the development. Having previously enjoyed exclusive rights to table games in the state, the five Native American casinos in New York are sure to expect a big cut into their revenues as they face stiff competition from the racinos. Not to mention the nearby casinos in Atlantic City and Connecticut who would lose clientele as well.

Representatives of the Senecas and the Oneidas, two of the biggest tribes who own gambling property in New York said they were left out of discussions about the passing of the amendment. The Senecas are already battling over three racinos they say are operating in their exclusivity zone. To them, the legislature has once again acted without considering the consequences to the Indian businesses.

Speaking to WNYC, Seneca nation president Robert Odawi Porter said, “For most of the last 200 years it’s been founded upon predatory actions by the state to take our land, to take jurisdiction over our remaining land, to try to tax activities on our land and frankly it’s just this constant groundhog day-kind of replay of various efforts by the state government to interfere with our treaty rights and to take what we have. And that really hasn’t stopped,”

For now, it remains up to the lobbyists to battle out not just over whether the gambling licenses are issued, but who they will be awarded to. In the coming year, the developments are sure to be observed with increasing interest not just by area casinos who fear competition, but bigger Las Vegas based companies such as Wynn Resorts and Las Vegas Sands who could also be eyeing a piece of the pie given the success of Genting.


Target Corp. posts strong year-end earnings, despite holiday dip.

Retail giant Target posted a less than stellar earnings report for the fourth quarter of 2011, but finished with a solid performance for the year overall.

In an earnings report released on February 23, Target Corporation reported fourth quarter net earnings of $981 million and full year net earnings of $2929 million. Compared to the same time last year, net earnings for the quarter were down 5.2 percent while the figure for the year in total stayed almost the same, going up 0.3 percent.

In terms of adjusted earnings per share, this translated to $1.45 a share for the quarter and $4.41 a share for the full year, representing increases of 8.3 percent and 14.3 percent respectively.

Despite the holiday season dip, Target exceeded many industry expectations, with its adjusted earnings per share of $1.45 well above the analyst’s projected estimate of $1.39. Target outperformed competitor Wal-Mart whose earnings performance trailed industry estimates as their aggressively low pricing hurt profit margins in the fourth quarter.

Chairman, president and chief executive officer of Target Corporation Gregg Steinhafel characterized the year as a successful one, in the face of considerable difficulty. “Target generated strong financial performance in 2011, overcoming sluggish economic growth, restrained consumer spending and an intensely promotional holiday season,” said Steinhafel in a press release. “For the full year, our U.S. businesses generated 14.3 percent growth in adjusted earnings per share, and we experienced our strongest growth in comparable-store sales since 2007.”

However, Steinhafel acknowledged the dip in performance into the weeks leading up to the holiday season. In a conference call with investors, he said the comparable store sales increased 2.2 percent which was below their expectations entering the quarter. “This shortfall was concentrated in the peak of the holiday season, as promotional activity throughout retail was exceptionally intense, and we chose to maintain an appropriate balance between driving sales and profitability,” said Steinhafel.

Executive vice president of merchandising Kathee Tesija also focused on the affect of high competition in promotional activity during the holiday season. “Research indicates that across retail, two out of three holiday season purchases in gift giving categories were on some sort of promotion, and these promotional discounts were significant, ranging from 25 percent in some categories to more than 50 percent in others,” said Tesija.

Target’s sales growth during the year was helped by a strong showing in grocery and credit card sales. As part of their “P-Fresh” initiative, the company remodeled nearly 400 stores in 2011 to add food and groceries, a main driver of traffic to the stores. Customer rewards initiatives such as the “5 percent Rewards” and the “REDCard Free Shipping” programs also helped to increase sales throughout the year.

The total earnings were also impacted by the companies expected expenses related to their expansion into Canada. Start-up and depreciation costs due to the expansion totaled $40 million for the quarter and $122 million for the year before interest and depreciation. Target expects to open its first Canadian stores in early 2013.

-Omar Bilal Akhtar

Ohio Unemployment Rate Drops

The state of Ohio, one of the Rust Belt’s hardest hit economies during the recession, is now recovering faster than some other states.

It has done especially well compared to states that were not affected as much by the recession. Last year, the U.S. Labor Department said Ohio businesses added almost 69,000 jobs between May 2010 and May 2011, making it seventh on the list of total adjusted job growth, behind North Dakota, Texas, Nebraska, Wyoming, Oklahoma and Utah.

The state ended the year in December with an unemployment rate of 8.1 percent, down from 8.5 in November. Ohio’s unemployment rate remained lower than the national figure of 8.4 percent, according to the Bureau of Labor Statistics. While the

state’s unemployment numbers generally mirrored the national average, 2011 was the first year since 2003 that Ohio’s unemployment rate had dropped below that of the national rate.

In a speech in Columbus last week, Ohio governor John Kasich attributed the job growth to the return of manufacturing jobs to the state, in particular the auto industry. Earlier this month, Honda Motor Co. announced its plans to set up a manufacturing plant for its Acura NSX model in Ohio. In addition, the discovery of natural gas deposits near Youngstown are also expected to create substantial industry jobs.

According to the Bureau of Labor Statistics, 18,300 manufacturing jobs were added last year.

“Manufacturing has made a comeback,” said Robert J. Gitter, Professor of Economics at Ohio Wesleyan University in Delaware, Ohio.

“A lot of goods made in Ohio are durable, built to last more than three or four years, such as cars. When the recession hit, people were more likely to hold on to those goods than buy new ones. With people feeling a little more secure with their money, purchases will go up and so will the manufacturing jobs.”

In addition to manufacturing, Gitter said other Ohio industries were adding jobs. “We do have an Information Technology presence and the healthcare sector is also adding jobs. If you look at nearby major cities like Cleveland and Pittsburgh that have traditionally been known for their manufacturing industries, you’ll see that healthcare has led the way

Gitter said he did not think local government efforts have had much impact on the

economy. “[Governor Kasich] gets too much blame and too much credit. You can do a little bit in terms of tax breaks and legislation, but these measures are overwhelmed by national conditions.”

However, Gitter remained cautious about the unemployment rate. He said part of the drop in the figure could be attributed to the thousands of people who had dropped out of the workforce, essentially giving up looking for a job. Well that’s actually an important point that should have been higher in the story.

In a press release, the Ohio Department of Jobs and Family Services said the number of workers unemployed in Ohio in December was 469,000, down from 496,000 in November.

It remains to be seen whether the increase in jobs will also mean an increase in average income. In 2010, Ohio’s median annual household income was $45,090, well below the national figure of 50,046 according to the American Community Survey. This figure was the lowest recorded for Ohio since the census began collecting data in 1984. 2010 also marked the worst year for the poverty level of Ohio, reaching 15.3 percent, worse than the nation’s at 15.1 percent.

-Omar Bilal Akhtar

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