Atlantic City casino profits plunge 30% with two more mouths to feed
Atlantic City casino profits continued to shrink in the first quarter of 2019 as the combination of new casino competition and sports betting expansion costs dragged down the numbers.
Figures released Wednesday by the New Jersey Division of Gaming Enforcement (DGE) show that AC’s nine brick-and-mortar casinos – plus two purely online gambling operations – generated revenue of $704.6m in the three months ending March 31, a 17.6% improvement over the same period last year.
However, of the seven casinos that were operating in Q1 2018, only one – Resorts Casino Hotel – posted a year-on-year revenue gain, and Resorts was coming off an unusually low result last year. The other six casinos suffered declines ranging from the Golden Nugget’s 2.6% slip to Harrah’s 15.7% tumble.
The revenue gains were only possible due to the two casinos that opened last June – Hard Rock Atlantic City and Ocean Casino Resort – which combined for an extra $135m added to Q1 2019’s total, as well as rising online gambling contributions and new revenue from sports betting.
Worse, the nine casinos’ gross operating profit plunged 29.6% to $87m over the same period. Five of the ‘original’ seven casinos reported falling profits, with two Caesars Entertainment properties – Bally’s AC and Harrah’s – leading the retreat with annual shrinkage of 54.4% and 41.9%, respectively.
The increased competition likely also contributed to AC’s hotel occupancy falling to 72.6% in Q1, a 5.3% year-on-year decline. And bear in mind that this Q1 didn’t suffer from anywhere near the type of inclement weather that was blamed for last year’s problems.
The Q1 report accelerates the market’s 2018 trend, in which revenue rose 7.5% year-on-year to $2.9b while operating profits fell 15.4% to $582.6m. April’s casino numbers showed only one casino, the market-leading Borgata, posted a year-on-year revenue gain.
The Q1 2018 report preceded the market’s mid-year launch of legal sports betting, and the casinos continue to incur expenses related to their rollout of land-based and online sports betting services.
On Wednesday, the Borgata announced that its shiny new 8k-square-foot land-based sportsbook, dubbed the Moneyline Bar & Book, would have its grand opening on June 29. The Borgata reportedly spent $12m spiffying up the book after launching a bare-bones betting nook last summer.
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