Casino Revenues in Atlantic City Drop by 10% as Inflation Factors Take a Toll
First quarter profits for Atlantic City casinos amounted to $140.5 million, which is a 9.9% decline compared to the previous year. Although net revenue climbed by 2% to reach $740.1 million, the nine casinos experienced a reduction in profit margins. The reduction was blamed on ongoing inflation that has led to higher overhead costs.
Labor expenses and the purchase of goods and services for the Atlantic City casino hotels have contributed to the pressure on profits, said James Plousis, chair of the New Jersey Casino Control Commission.
Out of the nine casinos, seven managed to stay in the black. Resorts and Bally's experienced losses during this period. While Resorts posted a $1.2 million operating deficit, its digital gaming and sports betting division earned $7.7 million, thus offsetting the financial setback. Bally's lost $2.4 million in maintaining its Boardwalk facility.
MGM Resorts' Borgata emerged as the most profitable casino, generating $51.7 million for its parent company. However, this represented a 10% drop compared to the previous year's first quarter. Hard Rock was the only other casino to record a year-over-year profit increment, achieving a $26.2 million profit, a 17.6% increase. Ocean's profits rose by 1% to $23.8 million.
The rest of the casinos - Harrah's at $16.9 million (-12%), Tropicana at $12.5 million (-25%), Caesars at $10.6 million (-7%), and Golden Nugget at $2.3 million (-52%) - all experienced a decrease in profits. Caesars Entertainment also reported a separate profit of $7.2 million ($6% year-over-year improvement) from its online gaming operations.
The city's casino hotel properties offered a total of 15,514 guestrooms as of 31st March. These rooms were occupied at a rate of 64.8% with an average nightly rate of $164.
Prior to the pandemic, hotel occupancy in Atlantic City was slightly higher at 72.6% but at a cheaper $126 average nightly rate. Occupancy rates for Q1 2022 and 2023 were 63% and 65%, respectively, with nightly rates of $152 and $156, respectively.
Despite the challenges, Plousis expressed optimism, indicating that Atlantic City casinos continue to invest in new amenities. This has led to an increase in visitors and allowed the resorts to charge more for their rooms.
"The strong competition in this market has been beneficial. In-person visitation rose during this period, as demonstrated by higher luxury tax, occupancy fees, and the number of occupied hotel rooms," Plousis mentioned.
Atlantic City's casinos are optimistic about a successful summer season, as the New Jersey gaming industry's busiest time of the year approaches. Bally's celebrates its 45th anniversary with a major property revamp, Borgata introduced a remodeled Long Bar, and Caesars is launching Buddy's Boardwalk Empire at Harrah's. Golden Nugget is in the process of renovating its hotel rooms, and Hard Rock and Ocean have recently invested in revamping their beaches.
Plousis emphasized that recent high-quality investments in the casino's hotel facilities provide visitors with various reasons to explore Atlantic City during the bustling summer season.
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Source: www.casino.org
