Atlantic City Casinos Face Revenue Decline: Analyzing the Latest Reports

Posted on: November 22, 2024, 02:52h.

Last updated on: November 22, 2024, 02:54h.

Recent reports from the New Jersey Division of Gaming Enforcement (DGE) reveal troubling trends for the nine casinos that call Atlantic City home. With a decline in profits and challenges posed by an evolving market, the local gaming landscape is undergoing significant changes. This article delves into the details of the latest revenue reports, the pressures affecting the industry, and the potential paths forward for these storied institutions.

A Week of Disappointment for Atlantic City

It has not been a favorable week for Atlantic City’s casinos. Following the DGE’s announcement that in-person gaming revenue experienced an 8.5% decline in October, further grim news surfaced: the casinos’ gross operating profits dwindled during the third quarter. Collectively, net revenue fell by 2.5%, totaling just over $925 million from July to September 2024—a troubling sign for an industry still recovering from the impact of the COVID-19 pandemic.

As the figures demonstrate, the ongoing economic pressures of inflation and rising operational costs are taking their toll. Gross operating profits saw a sharp decline of 13.8%, landing at approximately $236.6 million. These figures, defined as earnings before interest, taxes, depreciation, and other expenses, serve as a key profitability measure in Atlantic City’s gaming sector.

Distinct Performance Among Casinos

While all nine casinos managed to remain profitable overall, the disparity in performance is striking. Hard Rock reported a profit of $45.4 million, reflecting a modest increase of 2.4% year-over-year. Similarly, Caesars saw a notable improvement in its operating profit, which rose by 11.2% to $23.5 million. In stark contrast, several other establishments faced significant declines, ranging from a 10.9% profit drop at Bally’s to a staggering 43.8% decrease for the Golden Nugget.

Image Description: A woman plays a slot machine at Bally’s Atlantic City. The nine casinos in Atlantic City saw their operating profits shrink in the third quarter of 2024, but all nine remained profitable. (Image: AP)

Hotel Revenue and Visitor Trends

Despite these disappointing results, James Plousis, chair of the New Jersey Casino Control Commission, emphasized that net revenue remained stable at approximately $2.54 billion across the first three quarters of the year. However, he acknowledged that profitability is under strain. New challenges stemming from decreased visitor numbers have directly impacted room revenues for casinos.

In the third quarter of 2024, hotel occupancy rates hit 84.1%, marking a 1.5% drop from the previous year. Room rates also saw a decline, with the average nightly cost falling to $201—almost 8% cheaper than the same period in 2023. Ocean Casino Resort remains a beacon of higher rates, with averages of $336, while Golden Nugget competes with lower pricing at $125.

Industry Challenges and the Path Ahead

The challenges confronting Atlantic City’s casino industry are multi-faceted. Beyond inflation and labor shortages, casinos face increasing competition from regional gaming markets, which further complicates revenue generation efforts. Consumer preferences have shifted as well, stemming from changing behaviors witnessed during and after the pandemic.

Despite these headwinds, positive trends can be observed in specific sectors. Online gaming remains a bright spot, with 24% growth year-to-date, generating nearly $1.94 billion, exceeding last year’s figures by over $373.3 million. Likewise, sports betting continues to thrive, with wagers surpassing $912.8 million from January to October 2024, reflecting a 14% increase.

However, the reality is that Atlantic City casinos often share their winnings with third-party operators, including platforms like DraftKings and FanDuel, which complicates their financial landscapes further.

Conclusion: Navigating a Complex Future

As Atlantic City casinos navigate through a turbulent period marked by decreased in-person revenues and increasing operational challenges, their ability to adapt will be crucial. While the existing properties managed to maintain profitability, the future depends on how they respond to competitive pressures, evolving consumer behaviors, and economic uncertainties.

In an industry fraught with unpredictability, innovation and strategic planning will be vital for casinos wishing to thrive in the complex environment of gaming and hospitality. The coming months will be telling, as these establishments work to reclaim their status as premier entertainment destinations.