Atlantic City Casinos Face Profits Decline Amid Shifting Economic Landscape
ATLANTIC CITY, N.J. — The glitz and glamour of Atlantic City’s casino scene seems to be fading, at least in terms of operating profits. Recent statistics released by New Jersey gambling regulators indicate that the region’s nine casinos experienced a significant decline of nearly 14% in operating profits during the third quarter of 2024. This decline encapsulates the ongoing struggles that Atlantic City’s gambling establishments are facing in a post-pandemic economic landscape.
Profit Overview: A Steady Decline
The New Jersey Division of Gaming Enforcement reported that the nine casinos collectively realized a gross operating profit of $236.5 million in the third quarter—a drop of 13.8% when compared to the same quarter in 2023. Notably, while all nine casinos remained profitable, the results highlighted a sharp contrast in performance levels among the establishments.
Among the casinos, Borgata still emerged as a leader in operating profit, amassing $60 million, although this represents an almost 18% decrease from the previous year. Conversely, two casinos, Caesars and Hard Rock, bucked the trend, recording increases in their operating profits of 11.2% and 2.4% respectively.
Jane Bokunewicz, director of the Lloyd Levenson Institute at Stockton University, offered insight into these trends, noting that consumer demand has likely been an issue for the casinos over the summer of 2024. Her observations highlight that the average hotel room rate dropped by $17, suggesting that casino operators were compelled to lower rates in a bid to attract customers.
Impact of Economic Conditions
The decline in profits is not solely attributed to lowered hotel rates; it is also indicative of broader economic pressures. The absence of large-scale tourism events—such as annual air shows and well-attended beach concerts—during the summer months likely exacerbated the downturn in visitor numbers. Additionally, the surge in online gambling options has diverted funds from traditional brick-and-mortar casinos, as revenues generated online must be shared with third-party operators.
“This shift in consumer preferences, combined with ongoing economic pressures, presents a unique challenge for Atlantic City’s casino operators,” Bokunewicz stated.
Revenue Streams Taking a Hit
Beyond gambling, revenues from other sources also underperformed in the third quarter. With a total of $511.6 million in revenue from non-gambling activities, the casinos recorded a 5% decline from the same period last year—further emphasizing the challenges they are facing in attracting diverse customer spending.
James Plousis, chairman of the New Jersey Casino Control Commission, commented on the situation, attributing lower profits partly to rising operational costs. “Pressure from continuing high costs can be seen in lower profits compared to the same period last year,” he noted.
Looking Closer at the Numbers
When evaluating individual casino performance, the stark differences become clear. Apart from Borgata and the two standout performers, many establishments faced challenging conditions: Ocean Casino earned $36.5 million, down 15.3%; Tropicana reported $30.5 million, down nearly 17%; and Golden Nugget experienced a staggering drop of 44%, with profits totaling just $6.2 million.
This downturn has also affected internet-only entities, where Caesars Interactive NJ and Resorts Digital registered declines in their earnings, down 7.8% and 4.8%, respectively.
A Year-to-Date Overview
As of the first nine months of 2024, the casinos have collectively posted a gross operating profit of $547 million, reflecting a 9.2% decrease from the same timeframe last year. This significant drop calls for a comprehensive reevaluation of strategies within the Atlantic City gambling market.
Occupancy Rates and Hotel Performance Insights
Interestingly, analysis of hotel performance shows mixed results. The Ocean Casino Resort boasted the highest average nightly hotel room rate at $335.63, while Golden Nugget had the lowest at $124.70. On occupancy rates, Hard Rock led with an impressive 95.1% occupancy, overshadowing Golden Nugget’s 66.4%.
Conclusion: A Call for Strategic Change
The troubling trends within Atlantic City’s casino industry reveal a complex web of challenges in attracting visitors and maintaining profitability. With a combination of external economic pressures, changing consumer preferences, and the competition from online gambling, casino operators face the imperative of reevaluating their operational strategies.
As Atlantic City evolves, industry leaders must innovate to capture the attention of the modern gambler while navigating an increasingly competitive landscape. Without significant adaptations, the future profitability of the region’s casinos may remain uncertain, leaving lingering questions about the trajectory of this iconic gambling hub in the years to come.
