2019 Profit Dips for Atlantic City Casinos
According to the New Jersey Division of Gaming Enforcement, gross profit figures for Atlantic City casinos continues to slide. In a graph posted on www.pressofatlanticcity.com, total gross profit was down for the first six months of the year.
First quarter profit figures in 2018 topped $126.6 million, but they came in at $87 million this year. Turning to the second quarter of 2018, gross profit topped out at $171.4 million. Recent figures for the past three months show a continued decline to $159.3 million.
Big Revenue Drop At All Atlantic City Casinos?
This is especially concerning in light of the summer tourist season at this coastal resort town. The actual percentage drop in second-quarter casino gross operating profit was 6.8 against last year. The figures were recently released by the state’s Division of Gaming Enforcement.
Atlantic City has nine casino resorts, which is two more than the same time frame last year. Hard Rock Hotel & Casino and Ocean Casino Resort opened their doors for business in June of 2018. The $159.2 million in gross profit generated by the nine properties was down $11.5 million in the April through June time frame.
This information contrasts monthly gaming revenue, which reported increases through June of this year. The town’s casino resorts have posted 13 months of double-digit revenue growth. However, this has not translated all that well to gross operating profit figures. Actual gaming revenue in July only rose 7.8 percent to add to the industries slumping overall trends.
Borgata Hotel & Casino was the only Atlantic City casino that increased profit in the second quarter. It recorded an increase of 4.7 percent against the same quarter last year. This is still the highest-grossing casino in both revenue and profit. These financial results point to an overall casino industry that has not grown even with two more properties.
Gross operating profit is a widely accepted measure of how Atlantic City casinos are performing. Revenue increases alone do not paint a true picture of the overall financial health of the Atlantic City casino industry.
James Plousis is the chairman of the Casino Control Commission. He did note that net revenue was up 18.2 percent in the second quarter. This is the difference between total gaming revenue minus promotional allowances. It also takes rooms, food and beverage and other nongaming revenues out of the total. He stated that:
“Results from individual casinos show the market was still adjusting to the new level of competition through the second quarter. Next quarter will provide an opportunity to compare year-over-year results in Atlantic City’s nine-casino market.”
Reported operating profits for the first six months of 2019 are $245 million. Ultimately, this represents a 16.8 drop from the $294.5 million figure for the first six months of 2018.
The report adds that Hard Rock spent more than $500 million renovating the failed Trump Taj Mahal Casino Resort. The new casino’s gross operating profits for the first six months this year were $5.1 million. The new Ocean Resort lost nearly $23 million in its first seven months. Luxor Capital Group assumed ownership of the $2.4 billion resort in February of 2019.
