Atlantic City is about to start its first full summer season with a nine-casino market and live sportsbooks at all of its casinos since two new casinos opened and sports betting began in June 2018.
For the last year, the city’s total casino revenue has soared every month and is up 22 percent through the early months of this year. However, operational profits at the city’s casinos is down almost 30 percent through the first quarter. The addition of the Hard Rock casino and the Ocean Casino Resort on the city’s Boardwalk has clearly impacted every casino in the market. And those two casinos also lost money in the first quarter.
In short, Atlantic City has quickly gone from a declining casino market, to one of the most competitive in the country.
“These concerns are nothing new,” Michael Pollock, managing director of Spectrum Gaming Group told the Press of Atlantic City. “We are in a competitive environment, and the profit reports reflect what some operators have to spend to get people in the door.”
According to figures from the New Jersey Division of Gaming Enforcement, gaming revenue has increased by double-digit percentages every month since June 2018.
Late in June 2018, New Jersey began legalized sports betting which has topped more than a $1 billion in total sports betting handle in the last year. The Hard Rock Casino Hotel also opened in late June on the site of the former Trump Taj Mahal casino—one of five casinos that had closed in the city since 2014. The Ocean Resort Casino opened the same day on the site of the former Revel casino.
Cut to 2019. First-quarter reports show casino operating profits were $87 million, an about 29.6 percent decrease from the first three months of 2018. Hard Rock and Ocean both reported losses in the first quarter of 2019, with the former losing more than $6 million and the latter more than $10.3 million, according to the Press.
The biggest loser for the quarter was Bally’s, down 54 percent in profits to just $2.8 million. Harrah’s casino was also down 42 percent to $16.5 million. Most other casinos saw decline between 5-14 percent.
The exception was Resorts, which saw its gross operating profit up 80 percent in the first three months of 2019 to $3 million.
However, total gaming revenue increased 22.2 percent in the first quarter.
“While the market has grown, profit margins remain tight, reflecting the competitive landscape,” said James Plousis, chairman of the New Jersey Casino Control Commission in a press release.
But he cited other statistics showing that hotel occupancy was up nearly 19 percent and sales tax revenue were up almost 18 percent for the quarter.
Analysts interviewed by the Press pointed out that revenue does not take into account expenses such as taxes, capital investments and promotional expenses. A true test of the Atlantic City casino market’s health can’t be made until July numbers are released, reflecting a straight comparison of the nine-casino market. In this case, third and fourth quarter comparisons will truly identify trends in the market.
The city’s casinos also get help from city-wide promotions, such as the Atlantic City Airshow, which brings thousands of visitors to the city. The state Casino Reinvestment Development Authority recently approved adding $100,000 to the air show budget. Organizers say the money will be used to greatly increase the number of performers for the August 20-21 show.
In another story, Atlantic City is also getting a boost from non-casino development, including the planned expansion of the Richard Stockton University’s city campus. The school’s Board of Trustees approved a continuation of planning a six-story, $64 million residential complex for the campus. The state casino Reinvestment Development Authority has already approved preliminary plans for the project. The Authority controls the city’s tourism district.
The move comes less than a year after the college opened the first phase of its Atlantic City project in September, a three-story academic building and a 533-bed residence hall along Albany Avenue.
