The Atlantic City casino industry’s revenues are growing significantly. But its gross profits are declining even more significantly.
Those are the main takeaways from the New Jersey Division of Gaming Enforcement’s first-quarter 2019 financial statistics released on Wednesday.
In the first quarter of 2018, seven AC casinos produced a combined $599 million in net revenues and $124 million in gross operating profits. In the same quarter of 2019, net revenues climbed 17.6% to $705 mm for nine casinos, but gross profits fell 29.6% to $87 mm.
The primary difference is that Hard Rock and Ocean Casino Resort opened last summer. The seven holdover casinos produced a combined $569 mm in net revenues — a decline of $30 mm from 2018 — and $104 mm in gross profits, for a drop of $20 mm.
So the pie is larger, but the two extra slices have meant less for almost everyone. And the two new casinos both reported operating losses.
The biggest loser in 2019 1Q vs 2018 1Q was Bally’s, down 54% in profits to just $2.8 mm. Harrah’s also took a big hit, down 42% to $16.5 mm.
The other holdover casinos lost 5-14% — with one exception.
Resorts’ gross operating profit was up 80% in the first three months of 2019. Of course, context is key: Resorts’ profits climbed to $3 mm, which still is a smaller figure than all but Bally’s. Market leader Borgata, while down 12%, still reported profits of $39.7 mm.
Resorts also was the lone casino with positive net revenues in 2019 1Q compared to 2018 1Q, climbing 6.5% to $38.7 mm. That’s the lowest figure in Atlantic City, but the first casino in the city (opened in 1978) is showing signs it is in it for the long haul.
Ocean Casino Resort’s $57.1 mm in net revenues places it in sixth place, while Hard Rock’s $77.9 mm trails only Borgata ($184.6 mm), Harrah’s ($84.7 mm), and Tropicana ($80.2 mm).
Not surprisingly, hotel occupancy rates have slipped in this new era with more rooms to fill. After a rate of 81.1% in 2017 1Q and 77.9% in 2018 1Q, this year that figure fell to 72.6%.
Both Golden Nugget ($76.83) and Resorts ($89.36) reported average occupied room rates of under $100, while Borgata’s rate was a city-high $164.16. About half of the 15,102 available casino hotel rooms are located at Borgata, Harrah’s, and Tropicana.
Photo by Racheal Grazias / Shutterstock.com