In 2023, Atlantic City’s casinos experienced a decline in profitability compared to the previous year, despite the growth of the state’s online gambling market. The nine casinos collectively reported a gross operating profit of $744.7 million, a 1.6% decrease from 2022. When factoring in internet-only entities associated with the casinos, the decline was 4.1% on earnings of $780 million. Only three of the nine casinos saw an increase in profitability, highlighting challenges faced by the industry.
The rising costs of operation, including increased wages and expenses, have contributed to the decline in profitability for Atlantic City’s casinos. Additionally, consumer spending may not be keeping pace with these rising costs, leading to tighter margins for operators. The industry has been investing in customer acquisition and retention, offering incentives such as free play, rooms, meals, and drinks in hopes of stimulating spending. However, these efforts have not been matched by a significant increase in consumer spending.
The issue of smoking in Atlantic City’s casinos has become a contentious topic, with a group of casino workers advocating for a law that would eliminate the exemption allowing smoking indoors. The workers argue that banning smoking would align with the experience of casinos in states where smoking is prohibited, which have outperformed competitors that allow smoking. On the other hand, the casinos contend that banning smoking would put them at a competitive disadvantage, potentially leading to revenue loss and job cuts.
The Borgata was the most profitable casino in 2023, with an operating profit of $226.1 million, followed by Hard Rock ($125.5 million), Ocean ($117.2 million), and Tropicana ($93 million). Some casinos, such as Bally’s and Resorts, experienced declines in profitability compared to the previous year. Only four of the nine casinos had higher profits in 2023 than they did in 2019, before the onset of the COVID-19 pandemic, underscoring the ongoing challenges facing the industry.
In addition to financial concerns, Atlantic City’s casinos are also contending with issues related to the occupancy rates and room rates of their hotel properties. The average occupancy rate for the nine casino hotels was 73% in 2023, with Hard Rock having the highest average occupancy at 88.8% and Golden Nugget with the lowest at 53.8%. The average room rate for a casino hotel in Atlantic City was $180.67, with Ocean having the highest average rate at $270.31 and Golden Nugget with the lowest average rate at $123.31.
Overall, the data released by the New Jersey Division of Gaming Enforcement provides insights into the challenges facing Atlantic City’s casinos, including declining profitability, rising operational costs, and ongoing debates over smoking regulations. The industry continues to navigate these challenges while seeking ways to attract and retain customers in a competitive market environment.
