Atlantic City is a resort city in Atlantic County, New Jersey, popular for its casinos, boardwalk, and fabulous beaches. It’s also known for hosting a Miss America pageant. Casino gambling was legalized in Atlantic City back in 1976, and only two years later, the first casino saw the light of a day. It was followed by opening nine more land-based casinos, two online operators, and offering many other attractive services. They’ve had amazing success and high profits since, but the things haven’t been going well lately, with a number of casinos closing down in the past couple of years. Since the beginning of 2019, their profits have continued to decline.
Huge Losses for AC Casinos
According to the New Jersey Division of Gaming Enforcement, Atlantic City’s casinos generated the income of $704.6 million between the start of January and the end of March 2019, which is a 17.6% improvement in comparison to the same period in 2018. Even though these statistics show a positive trend, things are not that great when it comes to Resorts Casino Hotel.
Resorts Casino Hotel was the only casino, of the seven which operated in Q1 2018, with the same profit year-on-year. The fact is that the income they’ve generated last year was quite low as well. Those other casinos experienced huge declines, especially Harrah’s Resort Atlantic City. Their profits increased by 15.7%. Golden Nugget casino had more luck since their 2.6% tumble was the lowest out of all.
Seems like their problem started when two casinos re-opened this summer. Those casinos were Hard Rock Atlantic City and Ocean Casino Resort, opened in June 2018. They’ve hired thousands of employees and added additional hotel rooms. The key to their success was definitely spreading online gambling and sports betting. Together, these two casinos have made an additional profit worth $135m. Meanwhile, the gross operating revenue of 9 AC’s casinos dropped down for 29.6% to $87m. Bally’s AC experienced an annual fall of 54.4% and Harrah’s was 41.9%.
Reasons behind the Decline
Reasons, why Atlantic City has been experiencing this decline are not simple. It actually happened due to a combination of two circumstances. The first one is the competition in the casino gambling market and the second one is the incensement of sports betting costs.
When it comes to competition, it definitely affected the falling occupancy of Atlantic City’s hotel. It dropped to 72.6% in the first quarter of the year. The situation is much worse than last year, even though some problems with bad weather from last year did not occur this time.
Even though revenue in 2018 rose to $2.9b, operating profits fell significantly, and a 15.4% fall is definitely a reason to get worried. The only casino with year-on-year revenue gain was Borgata, according to Q1 2018 report.
The costs of land-based casino services and sports bookies were high in 2018, and it seems like those costs really contribute to Atlantic City profits decline. Borgata invested $12m in their new land-based sportsbook, which will be opened this summer. It’s called Moneyline Bar & Book and, hopefully, it will increase the overall profit of Atlantic City resort.
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