A stagnant betting market, along with a troubled national economy, is impacting Atlantic City casinos, as the most recent financial reports highlight the industry’s ongoing challenges.
According to data from the New Jersey Division of Gaming Enforcement, Atlantic City’s seven casinos collectively reported a 15% decline in first-quarter gross operating profits compared to 2022. The casinos generated $135.4 million in GOP (Gross Operating Profit) during the first three months of this year, a $23.6 million decrease from 2022.
Net revenues for the industry increased by 5% year-over-year, reaching $756.6 million. Visitor numbers (65.2%) and average hotel room rates ($156.53) also saw increases.
The total amount of wagering, including third-party online gaming and sports betting, as well as revenue from food and beverage, hotel rooms, and entertainment, contributes to the industry’s reported net revenues. On the other hand, GOP reflects profit before interest, taxes, and other expenses and is a widely accepted measure of industry profitability.
Atlantic City casinos ended 2022 with operating profits down nearly 5% for the year.
Wagering regulator encounters silver linings in over cast financial records
James Plousis, Chairman of the NJ Casino Control Commission, stated that increased costs are impacting casino revenue. Plousis also mentioned that the first-quarter revenue represents a five-year high.
“In comparison to the first quarter of last year, the casino resorts are attracting more people, and a progressive labor agreement has been reached. These actions are indicative of an industry that is preparing for growth and success,” said Plousis.
All seven casinos entered into new contracts with Unite Here Local 54, the largest labor union representing housekeepers, custodial staff, bartenders, servers, and others. The union’s former president described it as “the best contract we’ve ever had” when the deals were ratified in 2022.
According to state data, casino employment in March 2023 stood at 22,631 jobs. In March 2020, just weeks before the COVID-19 pandemic led to a three-and-a-half-month closure of all AC casinos, the industry reported 26,686 jobs.
Ocean City internet casinos spending major to bring back crowd
Plousis expressed optimism regarding recent investments by casino operators. He and others are confident that over $1.5 billion in capital improvements for AC casinos in the last few years will pay off this summer.
According to Her Bokunewicz, the Executive Director of the Lloyd D. Levenson Institute of Gaming, Hospitality, and Tourism (LIGHT) at Stockton University, “If the first-quarter net-revenue performance gives us an initial look at the upcoming tourism season, then we should expect to see continued efforts from operators as they strive to find their stride in managing the resurgence in consumer demand, the ongoing labor shortage, and the higher cost of labor — all of which are likely to impact the revenue/expense balance of the industry in the coming months.”
AC’ s problems are not a fresh trend
The AC market’s low gaming revenue has been a mixed bag for the better part of two years. PlayNJ has been reporting on Atlantic City’s COVID-recovery struggles since 2021.
Statewide, NJ online casinos and NJ sports betting have been experiencing significant growth. AC casino operators must report all revenue from online and sports betting but retain only a portion of it, with an undisclosed amount going to third-party providers.
However, revenues from brick-and-mortar gambling establishments are either declining or remaining flat. This situation would be even more challenging if it weren’t for two casinos that have significantly outperformed their previous returns. Strong performances from Hard Rock Atlantic City and Ocean Casino Resort have helped sustain the overall market since summer 2021.
Property-by-property 2023 1Q earnings breakdown
Ocean’s reported GOP in the first quarter of 2023 was $23.6 million, reflecting a 27.6% year-over-year increase and the highest total in the market.
Borgata Hotel Casino & Spa, the market’s perennial leader for almost twenty years, posted $22.8 million in earnings for the quarter, a 50% decline from the $45.9 million last year.
Hard Rock also experienced a decline in early 2023. The Boardwalk casino reported $22.2 million in GOP, a 17.5% decrease compared to the previous year.
Bally’s Atlantic City turned a small profit of $88,000, a significant improvement (+101.3%) from the property’s $6.9 million in reported operating losses in the first quarter of 2022.
Harrah’s Resort Atlantic City ($19.3 million, +21.2%) and Caesars Atlantic City ($11.4 million, +7.2%) saw increases in the first quarter. Tropicana Atlantic City ($16.8 million, -15.3%) and Resorts Casino Hotel (-$284,000, -153.9%) went in the opposite direction.
Golden Nugget Atlantic City cannot be compared to last year due to a reporting adjustment with its former online business, Golden Nugget Online Gaming. The Golden Nugget casino reported $4.8 million in GOP.
Caesars Entertainment experienced a decrease (-13.2%) but still reported $6.9 million in the first quarter. Resorts Digital’s revenue increased by 5.9%, from $7.5 million last year to $7.9 million in 2023.
Donald Danzis is the lead author for PlayNJ. He is a New Jersey native and a proud graduate of Rutgers University. With experience as a newspaper reporter for the New Jersey Herald and Press of Atlantic City, Donald has received statewide awards for his coverage of politics, government, education, sports, and business. Currently, he serves as PlayNJ’s Ocean City “insider” and an expert in the gaming industry, covering topics such as casinos, betting, and online gambling. David resides in Mays Landing with his wife and twins. When he’s not at the beach, on the golf course, or snowboarding, Donald enjoys cheering for his favorite New York sports teams, including the Yankees, Jets, Rangers, and Knicks.
