Atlantic City’s casinos experienced a decline in profits in the first quarter of this year, with only two out of the nine casinos reporting higher profits compared to the previous year. The collective gross operating profit for the nine casinos was $140.4 million, marking a 9.6% decrease from the same period in 2023. When internet-only entities are included, the profit falls to $155.4 million, down 8.7% from the previous year. Several factors were cited for the sluggish profits, including increased business costs, inflation, and a potential shift in revenue mix towards operations with narrower profit margins such as lodging and food and beverage.
Chairman of the New Jersey Casino Control Commission, James Plousis, also highlighted similar points, mentioning labor contracts that provided higher wages to casino workers and increased costs of goods for casinos. Two casinos reported operating losses in the first quarter: Bally’s lost $2.5 million compared to a $88,000 profit the previous year, while Resorts posted a $1.2 million loss, compared to a $284,000 loss in 2023. On the other hand, two casinos saw an increase in their gross operating profit: Hard Rock was up 18.3% to $26.2 million, and Ocean was up 1.2% to $24 million. However, Golden Nugget’s profit was down 51.7%, Tropicana’s was down 25.4%, Harrah’s was down 12.3%, Borgata was down 10.1%, and Caesars was down 7%.
In terms of internet-only entities, Caesars Interactive Entertainment NJ reported a 5.9% increase in profit to $7.2 million, while Resorts Digital saw a 3.2% decrease to $7.7 million. Hard Rock had the highest hotel occupancy rate in the first quarter at nearly 81%, while Golden Nugget had the lowest at 47.2%. The Ocean casino had the highest average hotel room price at $224.31, while Golden Nugget had the least expensive rooms at $93.68. Despite a nearly $8 increase in average daily room rates, Atlantic City’s casinos sold 10,000 more room nights in the first three months of 2024 compared to the same period in 2023.
The overall decline in profits for Atlantic City’s casinos in the first quarter of 2024 is a concerning trend for the gambling industry in the region. The increase in business costs, inflation, and a potential shift in revenue mix towards less profitable operations like lodging and food and beverage are impacting the profitability of the casinos. The losses reported by some casinos, as well as the decreases in profit for others, indicate a challenging environment for the industry. However, the increase in gross operating profit for a few casinos and the rise in hotel occupancy rates show some positive signs amidst the overall decline. It will be important for the casinos to address these challenges and find ways to improve profitability in the coming quarters.
Industry experts and regulators alike have highlighted the various factors contributing to the decline in profits, including labor costs, increased prices of goods, and changes in revenue mix. The significant losses reported by some casinos and the struggles faced by others point to a need for strategic adjustments and cost management measures. The positive performance of certain casinos in terms of higher profits and hotel occupancy rates offer a glimmer of hope for the industry. Moving forward, it will be essential for Atlantic City’s casinos to adapt to the evolving market conditions and implement strategies to enhance profitability and sustainability in the long term.
