Posted on: August 22, 2023, 03:37h.
Last updated on: August 22, 2023, 03:37h.
Atlantic City casinos were profitable in the second quarter but their bottom lines weren't nearly as robust as they were a year ago.
The New Jersey Division of Gaming Enforcement (DGE) today released the second quarter profit reports for the nine casinos. While net revenue for the April through June period climbed nearly 1% to $795.7 million, gross operating profits crashed 20% to $138 million.
Net revenue, the DGE explained in a statement, reflects casino revenue (less all promotional allowances) plus revenue from hotel rooms and food and beverage sales. Gross operating profits refer to earnings before interest, taxes, depreciation, amortization, and affiliate charges. Gross operating profit is “a widely accepted measure of profitability in the Atlantic City gaming industry.”
Casinos cited significantly higher costs for smaller profits. Most goods remain costlier than they did only a few years ago because of the nearly unprecedented inflation experienced in 2021 and 2022. And the resorts say labor costs have also surged, as the properties compete for employees.
For the first six months of 2023, the Atlantic City casinos have generated $1.57 billion in net revenue from their brick-and-mortar and online operations. While that's up 1.5% compared with the first six months of 2022, industrywide profits have slid 18%.
The casinos are attracting more visitors, as their 15,518 guestrooms were occupied 70% of the time through the first half of the year. The occupancy rate is about flat from the same six months in 2022, but the casinos have 418 more rooms today than they did a year ago.
The additional rooms came from Ocean, which in May 2022 announced the completion of 460 new occupancies and suites on floors that were never finished when the multibillion-dollar property opened as Revel in 2012.
The average nightly rate this year for an Atlantic City casino guestroom was $166, up just $3 from 2022. Gaming revenue, however, has fared a bit better, as brick-and-mortar casino revenue from January through June totaled more than $1.35 billion. That represents a 3.5% year-over-year improvement.
As reflected in net revenue, the size of the Atlantic City market in the first half and second quarter was similar to the same periods last year, with individual operators competing for customers,” James Plousis, chair of the New Jersey Casino Control Commission, said in a statement to Casino.org. “All operators were profitable despite reporting significantly higher costs, including but not limited to labor costs.”
Plousis highlighted that the nine casinos are collectively employing about 1,000 more workers than they did at this time a year ago. That is “very positive for the workforce, the region, and the state,” he said.
Hard Rock Most Profitable
MGM Resorts' Borgata Hotel & Casino has long dominated the Atlantic City gaming industry in terms of revenue and reputation. That has continued this year, as the Marina District property's net revenue of $376.9 million through six months is more than $114 million richer than Hard Rock in second place.
But Hard Rock's operations topped Borgata, as the Boardwalk resort reported the best gross operating profit through six months at nearly $52.7 million. Ocean Casino was second at $47.5 million.
First-Half 2023 Profits
- Hard Rock — $52.67M
- Ocean — $47.57M
- Tropicana — $41.68M
- Harrah's — $37.3M
- Borgata — $35.14M
- Caesars — $26.7M
- Golden Nugget — $12.51M
- Resorts — $12.3M
- Bally's — $1.91M
*Caesars Entertainment reports its iGaming revenue separately and therefore the gross profits for its three casinos are slightly higher than listed above. Along with its namesake resort, Caesars Entertainment operates Harrah's and Tropicana.
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