Profits down 15% in expanded Atlantic City casino market
ATLANTIC CITY, N.J. (AP) — Casino profits fell by more than 15% in Atlantic City in 2018, a year in which the downsized market reopened two shuttered gambling halls, according to figures released Monday.
The result was a decrease in gross operating profit of 15.4% for the year, to $582 million.
Five of Atlantic City’s 12 casinos closed between 2014 and 2016, and the market seemed to have stabilized at a smaller level with less competition. But the reopening in June of Revel as the Ocean Resort Casino, and the Trump Taj Mahal as the Hard Rock put two new competitors back into the mix.
Of the seven casinos that had been operating at the start of last year, five of them saw lower gross operating profits, according to statistics released by the New Jersey Division of Gaming Enforcement.
Only Tropicana and Golden Nugget increased their operating profits last year.
When plans to reopen the two casinos surfaced last year, there was concern in some quarters that the newly downsized market, which had regained its footing at a smaller level, might struggle to absorb the new competition, resulting in a smaller slice of the pie for everyone.
James Plousis, chairman of the New Jersey Casino Control Commission, acknowledged that “profit margins were tighter.”
“But the resort added thousands of jobs and many exciting new amenities, which position us well for continued growth,” he added.
Gross operating profit reflects earnings before interest, taxes, depreciation and other charges and is a widely accepted measure of profitability in the Atlantic City casino industry.
The Golden Nugget had the biggest increase in operating profit for the year, up 12.5% to $45 million. Tropicana was up 1.4% to $93.4 million.
The Borgata reported the biggest decline in profits, down 18.8% to $206 million, a figure that was about twice that of its nearest competitor. Caesars was down 15.4% to $79.6 million; Harrah’s was down 6.5% to $109.3 million; Bally’s was down 5.7% to $40.1 million, and Resorts was down 2.7% to $22.5 million.
Among internet-only entities, Resorts Digital was down 75% to $3.6 million, and Caesars Interactive-NJ was down 13.3% to $9.3 million.
The two new casinos each reported a gross operating loss for the year in 2018. Ocean Resort lost $17.8 million, while Hard Rock lost $9.1 million.
“The launch of a new property and the acquisition of new customers are always costly, but we’re very happy with the volumes and momentum into 2019,” Hard Rock President Joe Lupo told The Associated Press.
For the fourth quarter of last year, Atlantic City’s casinos saw a collective decline in gross operating profit of 41.1%, to $75.1 million.
Atlantic City’s casino hotels were more than 80% full in 2018. Resorts had the highest occupancy rate at 86%; the Golden Nugget was lowest at 74%.
The Borgata had the costliest average room rate at $179.64, while the Golden Nugget had the most affordable at $83.98.
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