Casinos across Atlantic City posted a significant decrease in earnings for the three months ending March 31 compared to figures for the same period last year. While net revenue fell 3.2 percent, the largest decline of nearly 12 percent can be seen in the operating profits reported by all seven casinos. Some analysts predict that the negative trend will continue through 2018, as two new casinos are slated for grand opening at the end of June.
The seven casino resorts in Atlantic City generated combined revenue of $599.2 million in the first quarter of 2018, down 3.2 percent from Q1 in 2017, according to data published Tuesday by the New Jersey Casino Control Commission. The figures are based on quarterly financial reports filed by the casino licensees to the state’s Division of Gaming Enforcement. They also show that the industry’s Gross Operating Profit dropped 11.7 percent from last year to $123.6 million. The shrinking revenues are concerning because while the casinos are still profitable, the market could see over-saturation in the coming months.
Moreover, there is a slight decline in every segment of casino resorts’ operations, according to the figures, which indicates a steady, consistent trend. The sales from third-party businesses decreased 4.0 percent to $39.2 million in the three months ending March 31 compared to the same period last year. The hotel occupancy in Atlantic City’s casino resorts was also down from the first quarter of 2017 – this year, hotels reported 77.9 percent occupancy rate, down 3.2 percent year-on-year.
Risk of Market Over-Saturation as Two Casinos Open Next Month
Some analysts believe that the opening of two casinos may have a negative impact on the state’s gaming industry. On June 28, the former Trump Taj Mahal, which shut doors in 2016 due to financial loss and disputes with workers, will reopen as Hard Rock. A second casino will reopen on the same day – the former Revel, which will now be known as Ocean Resort Casino. Since 2014, five of the twelve Atlantic City casinos have closed for one major reason, namely financial struggles.
Now, the re-expanded market could see too much saturation and not all nine casinos may be able to survive in the long term. Some of them already appear not so resilient – during the first quarter of 2018, Caesars reported an operating profit of $12.5 million, down 38.0 percent from last year. With an operating profit of $48 million, Borgata was the highest winning casino resort in the city during the period in question. Still, this was a decrease of over 27 percent compared with the same period last year. Harrah’s was next with $28.4 million in profits (up 18.7%), followed by Tropicana with $17.4 million (up 6.5%).
The Golden Nugget reported an operating profit of $10 million, a considerable increase of 61.5 percent from the first quarter of 2017. At $6.2 million in profits, Bally’s also saw an increase of 38.2 percent, while Resorts had the lowest operating profit of all – from $4 million last year, its profit fell to $1.6 million.