Borgata sees revenue, profit decline

ATLANTIC CITY, New Jersey -- Boyd Gaming Corp. said Monday its Borgata resort in Atlantic City saw revenues and profits decline during the second quarter because of reduced visitation and competition from casinos in neighboring states.

In a statement filed with the Securities and Exchange Commission, Boyd Gaming said the Borgata, which it owns in a 50-50 joint venture with MGM Resorts International, had a net income of $17.3 million in the second quarter that ended June 30, down from $18.3 million a year ago. Revenues at the hotel-casino were down 2.4 percent to $186.9 million.

Boyd Gaming pre-released earnings on the Borgata because the company is seeking $100 million in financing for a Borgata subsidiary. The financing deal needs approval from New Jersey gaming regulators.

Boyd Gaming, which will report its companywide second-quarter earnings on Aug. 3, did not disclose plans for how it would use the proceeds from the financing.

Analysts expect Boyd Gaming will seek to acquire MGM Resorts' share of the Borgata.

The company placed its Atlantic City holdings into a trust and is seeking to sell the assets after New Jersey gaming regulators said the MGM Resorts' joint venture partner in the MGM Grand Macau was unsuitable.

Boyd Gaming has the right of first refusal to purchases MGM Resorts' stake.

The company told investors day trips into Atlantic City had dropped off while casino expansion in Pennsylvania cut into the company's customer base.

Gaming analysts said the Borgata could suffer additional losses because casinos in Pennsylvania and West Virginia added table games in the past few months.

"We think second-quarter results are less important than the coming operating results in the second half of 2010, when the Atlantic City market faces increased regional competitive pressures from tables in Pennsylvania and West Virginia and the first Philadelphia casino opens this summer," JP Morgan gaming analyst Joe Greff told investors.