Atlantic City Casino Revenues Up But Profits Down in ’22 Second Quarter
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Posted on: August 23, 2022, 08:18h.
Last updated on: August 23, 2022, 09:01h.
Atlantic City casinos collectively reported a gross operating profit of approximately $183.6 million in the second quarter of the year. The bottom line marks a 0.8% decline from the same three months in 2021, and it comes despite the casinos seeing revenue jump by more than 14%.
The New Jersey Division of Gaming Enforcement (DGE) says the nine casinos generated net revenue of $828.7 million in the second quarter from gaming, hotel rooms, and food and beverage. Though their revenues increased, so did the casinos’ overhead, as record inflation substantially increased costs for the resorts.
Eight of the nine casinos still managed to post a profit. Bally’s was the lone resort in the red, as the Boardwalk property continues to invest substantial capital into overhauling the resort.
Although gross operating profit figures were relatively flat in the second quarter, during that time period the casino hotels were making important and significant investments in their facilities to create new and exciting experiences for their guests to enjoy. Those capital investments are critical to ensure the long-term appeal of Atlantic City as a resort destination,” said James Plousis, chair of the New Jersey Casino Control Commission.
Gross operating profit reflects a casino’s earnings before interest, taxes, depreciation, amortization, charges from affiliates, and other miscellaneous items, as reflected on each casino licensee’s income statement. It is a widely-accepted measure of profitability in the Atlantic City gaming industry.
Mixed Results
MGM Resorts’ Borgata maintained its dominance in Atlantic City. The Marina District casino posted a profit of $42.2 million in the second quarter, which is almost 5% better than the same quarter in 2021.
Hard Rock reported the second-best profit at $38 million, and Tropicana was third at $30.3 million. Hard Rock saw the industry’s biggest year-over-year profit increase, as the resort’s bottom line was 46% higher than Q2 2021.
As for the remaining casinos in the black, Harrah’s profit totaled $21.4 million, down 14%, Ocean made $15.6 million, down 8%, Caesars earned $14.1 million, down the most at almost 24%, Golden Nugget reported $9.1 million, down 15%, and Resorts’ profit came in at $6.1 million, an 8% premium.
Though eight of the nine casinos were profitable during the quarter against difficult economic conditions, five casinos reported lower Q2 profits compared with pre-pandemic 2019.
Borgata, Caesars, Bally’s, Golden Nugget, and Harrah’s all made less money operating their resorts in Q2 2022 than in Q2 2019.
Occupancy Down, Room Rates Up
Fewer people are staying at Atlantic City casinos than did before COVID-19. The casinos’ 15,100 guestrooms were occupied 77% of the time from April through June, down more than 4% from 2019.
However, with overhead skyrocketing for the casinos, the resorts have greatly increased nightly rates. The average going rate for a casino hotel room was $172 in quarter two, about $32 higher than what the resorts charged in 2019.
Jane Bokunewicz, director of Stockton University’s Lloyd D. Levenson Institute of Gaming, Hospitality, and Tourism, said the resorts have adapted to the economic uncertainties currently facing the industry.
“Amid uncertainties in the market, from the continued influence of public health concerns to inflation and raised fuel prices, the industry as a whole has learned to adapt and operate profitably,” Bokunewicz said.
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