Moody's notes negative development for Atlantic City casinos

Moody's Investors Service said the legalization of table games like poker and blackjack by Pennsylvania on Thursday is a negative development for the credit profiles of already-suffering casino operators in nearby Atlantic City such as Harrah's Entertainment, Inc. and Trump Entertainment Resorts Holdings, LP.

These companies - already suffering from weak gaming demand and increased competition from slots in Pennsylvania - are bound to see further declines in gaming revenues owing to the new table game legislation, the agency said, adding that 30% of Atlantic City's total annual gaming revenue is generated by table games.

For casino operators like Las Vegas Sands Corp., Mohegan Tribal Gaming Authority and Penn National Gaming, Inc. - each of which owns a casino in eastern Pennsylvania - Moody's view this as a credit-positive event because of the additional gaming revenue that will likely come to the state from Atlantic City.

However, the agency said it doesn't believe that this new legislation will be enough to positively affect the ratings of the companies that own eastern Pennsylvania gaming facilities. This is because many of them are rated B3 or lower and/or generate a majority of their earnings from casinos outside of Pennsylvania, Moody's explained.

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