Atlantic City’s casinos earnings rise, but some still lag
ATLANTIC CITY, N.J. (AP) — Atlantic City’s casinos collectively saw their profitability increase in the first quarter of this year compared not only with a year earlier, but also to the pre-pandemic period, according to figures released Monday.
But only four of the nine casinos indivdually reported higher gross operating profits than they did in the first quarter of 2019, before the coronavirus pandemic took hold.
Figures released by the New Jersey Division of Gaming Enforcement show the casinos and their online arms collectively posted a gross operating profit of $155.6 million in the first three months of this year.
That’s up 63% from the first three months of 2021, and nearly 79% from the first quarter of 2019. (The pandemic forced Atlantic City’s casinos to close for 3 1/2 months starting in mid-March of 2020, so 2019 is a more useful point of comparison.)
Yet the news was not all good. Only four casinos — Borgata, Hard Rock, Ocean and Tropicana — were more profitable in the first quarter this year than they were at the start of 2019.
Gross operating profit represents earnings before interest, taxes, depreciation and other expenses and is a widely accepted measure of profitability in the Atlantic City gambling industry.
Eight of the nine casinos were profitable in the first quarter of this year, with only Bally’s showing an operating loss, of $6.8 million.
The Borgata had a gross operating profit of $45.8 million; Hard Rock earned $26.8 million; Tropicana earned $19.7 million; Ocean earned $18.5 million; Harrah’s earned $15.9 million; Caesars earned $10.6 million; Golden Nugget earned $5.6 million; and Resorts earned $536,000.
Hard Rock had the biggest percentage increase in operating profit compared with last year, up almost 213%. Ocean was up over 133%.
Jane Bokunewicz, director of the Lloyd Levenson Institute at Stockton University, which studies the Atlantic City gambling market, said the resort showed “meaningful growth” during what is traditionally the slowest period for them in the first quarter of the year.
She also noted that the casinos’ collective gross operating profit was the highest first-quarter performance in the past five years.
“As operators continued to face labor shortages in the first quarter, they have had to find creative ways to satisfy consumer demand with fewer employees,” she said. “The high gross operating profits in the first quarter indicate that they have found an efficient balance between staffing levels and volume of business.”
Entering the second and third quarters of the year, the period in which the casinos make most of their money, Bokunewicz said, higher casino hotel occupancies should push nongambling revenue higher but also increase the demand for casino workers.
“How well operators can keep up with this demand, given the labor supply, rising wages and product costs, will determine if recent gross operating profit performance will persist,” she said.
Bokunewicz said the comparison with the first quarter of 2019 is not ideal, either. The first quarter of 2019 began with both Hard Rock and Ocean open for only six months, with both casinos posting operating losses from ramping up their businesses and trying to gain market share. And some casinos have split their internet operations from their in-person operations since then.
Casino hotel occupancy in the first quarter of this year was 63%, almost 11% higher than the same period a year ago. Ocean had the highest average occupancy at 81.5% while Golden Nugget was the lowest at 41.6%
Ocean had the highest average room rate at $209 while Resorts had the lowest at $106.
Among internet-only entities, Caesars Interactive Entertainment NJ earned $7.8 million in the first quarter; Golden Nugget Online Gaming earned $6.7 million; and Resorts Digital made $4.1 million.
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