Atlantic City’s casinos faced a decline in profitability in 2023 compared to the previous year despite New Jersey’s thriving online gambling market, according to data released by the New Jersey Division of Gaming Enforcement on Monday.
The nine AC casinos collectively reported a gross operating profit of $744.7 million in 2023, marking a 1.6% decrease from 2022. When factoring in two internet-only entities affiliated with several of the casinos, the decline widened to 4.1%, with total earnings reaching $780 million.
While all nine casinos remained profitable in 2023, only three saw an increase in profitability, signaling challenges in the industry despite the growth of online gambling.
Jane Bokunewicz, director of the Lloyd Levenson Institute at Stockton University, which analyzes the Atlantic City gambling market, said the figures “suggest it is getting more expensive for New Jersey’s casinos to operate, and patron spending may not be keeping pace,” according to the Associated Press.
Bokunewicz highlighted rising operational costs, including wages and goods, alongside increased spending on customer acquisition and retention efforts such as free play, rooms, meals, and drinks. However, these expenses have not been offset by a significant increase in consumer spending as anticipated.
The statistics are expected to fuel the debate over smoking regulations in Atlantic City’s casinos. A group of casino workers, supported by the United Auto Workers Union, recently filed a lawsuit seeking to overturn a provision in New Jersey’s indoor smoking law that exempts casinos. Workers argue that banning smoking could improve revenue and jobs, citing successful experiences in states with smoke-free casinos.
On the other hand, casinos say that ending smoking will place them at a competitive disadvantage to casinos in neighboring states, costing revenue and jobs. The casino industry is likely to argue that, amid a context of profitability decline, banning smoking is not in the best interests of the sector.
The Borgata led in operating profit at $226.1 million (up 1.3%), followed by Hard Rock ($125.5 million, down 2%), Ocean ($117.2 million, up about 22%), Tropicana ($93 million, down 15.1%) and Harrah’s ($80 million, down 9.7%). Operating profits at Caesars, Bally’s, and Resorts were $51.7 million, $11.1 million, and $9.5 million, respectively.
Only four of the nine casinos (Borgata, Hard Rock, Ocean and Tropicana) saw higher profits in 2023 compared to pre-pandemic levels in 2019. Additionally, the industry faces challenges from increased operational costs following substantial pay raises for workers in 2022.
The average occupancy rate across the nine casino hotels was 73% in 2023, with Hard Rock boasting the highest average occupancy at 88.8%. In contrast, Golden Nugget had the lowest at 53.8%. The average room rate stood at $180.67, with rates varying from $123.31 at Golden Nugget to $270.31 at Ocean.
Original article: https://www.yogonet.com/international/noticias/2024/04/09/71641-atlantic-city-casinos-report-decline-in-2023-profit-despite-boost-from-online-gambling
