Casino Earnings in Atlantic City Decline by 7.5% During the Third Quarter of 2023
The famed Atlantic City casinos faced a challenging third quarter in 2023, with earnings falling by 7.5% compared to the previous year, marking a concerning trend for this iconic gambling destination.
The Struggle for Profit
Atlantic City’s casinos, along with two exclusive online platforms, reported a total third-quarter revenue of $281.2 million. This figure represents a significant 7.5% drop from the previous year, hinting at underlying challenges in the industry. The decline, while impactful, must be viewed within the broader context of the casinos’ struggle to adapt to changing market dynamics, including increased competition and evolving consumer preferences.
A Closer Look at Casino Performances
Despite the overall downturn, certain casinos showed resilience. Hard Rock, for instance, achieved a gross operating profit of $44.3 million, nearly maintaining its previous year’s performance. In contrast, the Ocean Casino Resort saw a notable profit increase of over 10%. This varied performance among establishments underscores the need for continued innovation and adaptation in the face of an increasingly competitive market.
1 AM in Atlantic City 🎰 pic.twitter.com/kfseGbEFPE
— claudius (@claudnowak) November 25, 2023
Understanding the Economic Impact
Expanding on the economic impact of the downturn in casino profits in Atlantic City, the consequences extend beyond the immediate revenue figures. Atlantic City’s casinos are a significant part of the local economy, generating substantial revenue through gaming activities like table games, poker, and slot machines. In fact, the lifetime revenue from these activities has exceeded $18 billion, illustrating the massive scale of this industry.
However, casinos in Atlantic City offer more than just gaming. They have diversified their revenue streams through non-gaming amenities like restaurants, bars, nightclubs, hotels, retail shops, spas, and fitness centers. These facilities contribute significantly to the overall guest experience and, consequently, to the casinos’ revenue. This diversification has been a key strategy for casinos to maintain their appeal and profitability.
The first quarter of 2023 saw Atlantic City’s nine casinos reporting a gross operating profit of $135.4 million, a decrease of 14.8% year-on-year. Despite this decline, their combined revenue increased by 4.6% in the same period, indicating the industry’s challenges and opportunities in the current economic climate.
Several factors influence casino revenue. Seasonal variations and tourism trends play a significant role, with the city attracting more visitors and higher revenues during the warm summer months. Conversely, fewer tourists in the colder months lead to reduced profits.
Additionally, competition with Las Vegas and the increasing popularity of online casino platforms have impacted traditional casino revenues. USA betting sites have become more prevalent in recent years, sometimes outperforming physical casinos. If it continues, this trend could further affect the revenues of traditional gambling establishments in Atlantic City.
The economic impact of declining casino profits in Atlantic City is multifaceted, affecting not just the casinos themselves but also the broader local economy. The casinos’ ability to adapt to changing market dynamics, diversify their revenue sources, and compete with emerging trends in online gaming will be crucial for their future success and stability.
Challenges and Opportunities
The decline in casino profits coincides with various challenges, including a significant cybersecurity issue that impacted the parent companies of four casinos. However, the third-quarter gross operating profit was still the third-best in Atlantic City since 2008.
Other casinos, like Tropicana, Harrah’s, and Caesars, faced varying degrees of profit decline. These developments highlight the necessity for Atlantic City’s casinos to navigate an increasingly complex landscape, balancing traditional operations with innovative approaches to attract new customers.
Key Statistics from the Third Quarter
- Overall Revenue Decline: A 7.5% decrease in overall casino earnings, with total revenue of $281.2 million.
- Individual Casino Performances: Mixed results across casinos, with Hard Rock and Ocean Casino Resort standing out.
- Economic Resilience: Atlantic City outperformed pre-pandemic levels in net revenue and gross operating profit.
- Occupancy Rates: Hard Rock led in hotel room occupancy rates with over 96%, while Golden Nugget had the lowest at just over 67.
In Conclusion
As Atlantic City’s casinos face a pivotal moment, the 7.5% decline in earnings signals a pressing need for strategic evolution. The city’s casinos are recovering from the pandemic and pursuing extensive upgrades to enhance customer experience and adapt to market trends.
In 2022, Atlantic City casinos experienced a revenue of $215.6 million, the highest in a decade, and a 9% growth from 2021, indicating a potential rebound. Several casinos are undertaking significant renovations.
Bally’s, for instance, is investing over $100 million to refurbish its casino and hotel, including a 360-degree rotating bar and an indoor/outdoor beer garden. Caesars Entertainment is upgrading its properties, introducing the Nobu Hotel and an innovative casino floor at Tropicana Atlantic City to deliver a futuristic gaming experience. Ocean Casino Resort and Hard Rock Casino are also implementing significant upgrades, with Ocean focusing on its sportsbook, dining, and entertainment offerings and Hard Rock enhancing its live entertainment area with high-profile performances.
These upgrades, amounting to over $1 billion in recent years, are part of a broader strategy to maintain Atlantic City’s status as a leading entertainment destination, especially as competition with other regions like New York intensifies. Mark Giannantonio, President of the Casino Association of New Jersey, emphasizes the importance of collaboration with local and state officials to further Atlantic City’s economic growth and ensure its long-term success.
The path forward for Atlantic City’s casinos lies in their ability to innovate, adapt to changing consumer preferences, and expand beyond traditional gambling. By reinventing their offerings and enhancing customer experiences, these casinos aim to attract new visitors and regain their prominence in an increasingly digital and competitive market.
