In 2023, Atlantic City’s casinos saw a decline in profitability compared to the previous year, despite the help from the state’s online gambling market. The nine casinos collectively reported a gross operating profit of $744.7 million, which was a 1.6% decrease from 2022. When internet-only entities associated with some of the casinos were included, the decline in profitability was 4.1% on earnings of $780 million. Only three casinos experienced an increase in profitability during this period. Higher operational costs, increased wages, and more expensive goods, combined with increased spending on customer acquisition and retention, contributed to the decline in profitability.
These figures have sparked a debate over whether smoking should continue to be allowed in Atlantic City’s casinos. Casino workers have been advocating for a law to eliminate the provision in New Jersey’s indoor smoking law that exempts casinos. Recently, the workers, along with the United Auto Workers Union, filed a lawsuit to overturn the law. While casinos argue that banning smoking would put them at a competitive disadvantage, workers point to studies showing that casinos in states that ban smoking are outperforming those that allow it. The Borgata was the most profitable casino in 2023, followed by Hard Rock, Ocean, Tropicana, Harrah’s, Caesars, Bally’s, and Resorts. Only four casinos had higher profits in 2023 than in 2019, before the pandemic.
The casinos are also grappling with a contract reached in 2022 that gave workers significant pay raises. In 2023, the nine casino hotels had an occupancy rate of 73%, with Hard Rock having the highest average occupancy at 88.8% and Golden Nugget the lowest at 53.8%. The average room rate in an Atlantic City casino hotel was $180.67 last year, with Ocean having the highest average rate at $270.31 and Golden Nugget the lowest at $123.31. The industry is facing challenges such as increased operational costs, competition from neighboring states, and the impact of COVID-19 on profitability.
Despite the challenges, all nine casinos were profitable in 2023. However, the decline in profitability compared to the previous year indicates a need for the industry to adapt to changing market conditions. With consumer spending not keeping pace with operational costs, casinos may need to reassess their strategies to remain competitive. The ongoing debate over smoking in casinos and the impact of the pandemic on profitability highlight the need for the industry to innovate and find new ways to attract and retain customers. Overall, the casino industry in Atlantic City is facing both opportunities and challenges in the current economic environment.
