New Jersey-based gaming analyst CCH Morowitz has released a new report, “Perspectives: Atlantic City Market Analysis, Outlook & Forecast,” which analyzes the performance of the Atlantic City market and offers an outlook on the prospects for the future with two new Boardwalk casinos slated to open this summer.
With the anticipated grand openings of the Hard Rock Hotel & Casino and the Ocean Resort Casino (formerly the Taj Mahal and Revel properties, respectively), the forecast incorporates a number of proprietary econometric and simulation models, which will be updated as the performance of these new properties and the overall Atlantic City market progresses. Highlights of GGH Morowitz’s analysis & forecast include:
- Consolidation, Closures & Efficiencies: Recent economic and competitive market conditions, and performance of Atlantic City casinos point to a stabilization and potential resurgence of the casino industry in AC.
- AC casinos all reported positive EBITDA in 2017 with combined EBITDA of $602 million in 2017 (up from $100 million in 2013), the highest level since 2009.
- Market consolidation over last five years saw total number of casinos operating decline from as many as 12 in 2013 to the current seven (pre-opening).
- Internet gaming has become major driver of profit growth with revenues projected to exceed $300 million by 2019.
- Despite recent strength, profits remain highly concentrated with Borgata accounting for almost half (46 percent) and the Marina district properties (including Borgata) vs. the Boardwalk properties accounting for almost two-thirds of industry EBITDA.
- The impact of this competition forced AC to fundamentally transform from a high-frequency convenience gamers market to a regional destination & heavily weekend-oriented gaming/entertainment market.
- AC is undergoing a “renaissance” of sorts, which could potentially lead to longer term resurgence, fueled by the strength of the fewer remaining casinos, new capex activity (see below), and significant expansion and investment in non-gaming attractions & industries.
- AC gaming revenues have potential to grow by as much as 14 percent, pre-opening of a new Philadelphia casino and depending upon the extent of impact of legalized sports wagering.
“In the absence of macroeconomic/exogenous shocks, and while there will be challenges for certain individual properties, we believe the overall outlook for AC remains vibrant despite the immediate impact of new competition entering the market,” said Cory Morowitz, GGH Morowitz co-managing partner. “While no one has a crystal ball, our proprietary analytics and econometric forecasting/simulation models allow us to assist our clients with monitoring and measuring impact analysis as well as market forecasting based upon key known variables which are critical for strategic planning and profit optimization.”
An executive summary of the report can be downloaded at www.gghsp.com. For additional information, including to order a copy of the full report and/or to subscribe to ongoing GGH Morowitz’s Market Perspective updates, contact Cory Morowitz at cory@morowitzgaming.com or 609-226-9426.
