In 2021, Atlantic City gaming revenue through November grew 88.7 percent compared to the same period in 2020, reaching $4.3 billion.
Let’s break that down:
- According to the New Jersey Division of Gaming Enforcement (DGE), sports betting rose 127.8 percent and accounted for almost 17 percent of total gaming revenue.
- Online casino win jumped 41.7 percent and represented more than a quarter of total revenue.
- Land-based casinos won $2.3 billion, a 71.6 percent increase over 2020.
Pretty good numbers until you realize what 2020 was all about: Covid-19. Casinos and other businesses shut down for months. And on their return, capacity restrictions and virus fears took a toll on visitation.
A better comparison would be with pre-Covid 2019, when casino win in AC totaled $2.5 billion through November, 45 percent more than 2020 and also surpassed 2021.
Now turn your attention to online gambling: iGaming won $433 million through November 2019, less than half the amount for 2020. Sports betting totaled $270 million, more than 20 percent below 2020 figures. Again, these are pretty good numbers for 2020, especially during a pandemic. Then again, you had people stuck at home for months, but with computers and smartphones. Hence, online play grew—a lot.
New Year, New Start
In 2020, the pandemic left its mark on every jurisdiction and property. In 2021, the hospitality trade looked for a new start. For the most part, that bounce-back took place as planned. People flocked back to casinos and hotels, comfortable with steps taken to make the properties Covid-safe. The development and availability of vaccines helped.
“The story is the significant rebound and record-breaking revenue that you’ve seen in the United States,” said Brendan D. Bussmann, director of government affairs for Global Market Advisors. “While we’re still in recovery mode and have potential headwinds on the horizon, the U.S. numbers continue to show that not only is gaming resilient, but it’s also a mainstream form of entertainment.”
The American Gaming Association (AGA) was cautiously optimistic in its assessment of 2021. “But even the biggest of optimists couldn’t have imagined our record recovery,” said Casey Clark, AGA senior vice president. “More than $48 billion in revenue through November 2021 ranks as the highest-grossing commercial gaming revenue year ever. These results shattered expectations and showed that our industry’s focus on (and investments in) health and safety paid off.”
As Atlantic City’s numbers revealed, sports betting and iGaming continued to grow even as brick-and-mortar casino revenues hit high marks. “We know that gaming customers embrace having access to both online and retail options; it isn’t an either/or proposition,” Clark said. “Our customers—especially the important young adult demographic—want to engage with our products how, where and when they want.”
Sports Betting: Making It Pay
The growth of sports betting nationwide and its growing availability—it’s in 33 jurisdictions, many with online and mobile options—also owes a lot to the fortunes spent on customer acquisition. For Swissman, that was the top story in sports betting for 2021.
“You couldn’t turn your head without running into another television advertisement from some of the biggest online sportsbooks in the country. Customer acquisition at all costs was the name of the game. In fact, almost all these operators spent so much time, energy and money on acquiring new customers and advertising that none of them generated any returns on the billions of revenue generated,” he said.
It’s not a sustainable business model, he added. “This may very well be the biggest sports betting story of next year too when we discuss consolidation, mergers and acquisitions and a business model that pivots on the road to profitability and long-term sustainability.”
Yet…
“For sports betting, 2021 will be the year some locales said, ‘Let’s find a way to break the model in the wrong way,’” Bussmann said. He cited New York’s stratospheric 51 percent tax rate, Maryland’s 60 licenses up for grabs, and other curious approaches.
“For legislatures looking at sports betting in 2022 let’s look at some of the early models that have shown solid market structure and growth. New Jersey, Indiana and Michigan all offer structures to cover how to set up a market that allows competition through strict regulation,” Bussmann said.
Marketing, MICE & More
Also in 2021, many gaming operations experienced record earnings and profit margins, driven largely by significant reductions in casino marketing budgets, Swissman said.
“It may not be the sexiest thing to talk about, but I believe a top issue for land-based operators in 2022 will be maintaining discipline around their marketing and promotional budgets,” he said.
Another issue that surfaced in Atlantic City and likely applies elsewhere is the misperception of iGaming and sports betting as they apply to casino revenues, said Joe Lupo, president of Hard Rock Hotel & Casino Atlantic City. Both facets are tied to third-party operators like FanDuel, PointsBet and BetMGM, among a growing number of sportsbooks and iGaming operators.
“The separation of casino wagering vs. the more than 20 third-party online sites in New Jersey needs more transparency and accurate reporting to ensure clarity in the industry,” said Lupo, who also serves as president of the Casino Association of New Jersey trade group.
There are still a few other missing pieces to the puzzle before full recovery, said the AGA’s Clark. “While meetings and conventions are returning and international travel has started to reopen, these revenue streams continued to lag due to the prolonged nature of the pandemic and uncertainties that come with it.”
In Las Vegas, the $1 billion expansion of the city’s Convention Center has been a valuable addition in that market, said Erica Johnson, director of communications for the Las Vegas Convention and Visitors Authority. “(It) enabled us to expand our campus from 3.2 million square feet to 4.6 million square feet, which will enable us to host more shows throughout the facility.”
The expansion opened in June 2021 with the World of Concrete trade show. That convention also marked the return of meetings to the destination after the pandemic halted in-person gatherings. According to Trade Show News Network, for 26 years in a row, no other destination in North America has hosted more major trade shows than Las Vegas.
Conventions aside, Las Vegas proved remarkable on its own, Bussmann said. “From the pending sale of the Venetian Palazzo to Resorts World Las Vegas to three tribes on the Strip, it’s been a year of change. It’s set the stage for some interesting optics going into 2022 and beyond. M&A activity will continue to be important, but this year’s activity may end up being transformative.”
A tribal presence began with Mohegan Gaming and Entertainment managing the casino inside the Virgin Hotels Las Vegas at the beginning of the year. In May, the San Manuel Band of Mission Indians revealed it will acquire the Palms on the Vegas Strip. Most recently, it was announced that the Seminole Tribe of Florida would buy the iconic Mirage Hotel Casino.
“Native American casino operators will undoubtedly bring their unique operating model which focuses more on the long-term benefit of tribal citizens than quarterly results,” Swissman said. “I think they will give the big, corporate, publicly-held companies a run for their money.”
Cashless is King
The continued growth of digital casino payments—now available at casinos in 10 states—will be a key component to gaming companies’ consumer engagement strategies. Important to that growth is the continued evolution of regulations to meet the realities of today’s market, Clark said.
The concept of cashless gaming was one of the biggest stories this year, Swissman said. “Throughout the pandemic, as customers became more comfortable with cashless forms of payment in all areas of their lives, they began to look for the same from the casinos they frequent. This sent fintech companies, slot manufacturers and other adjacent businesses on an accelerated development path to try to grab market share. I believe it is indicative of the more technologically, mobile-driven experience that customers will want in the future.”
