Atlantic City casinos struggle in Q1; CIE New Jersey loses $7.1m on startup costs

atlantic-city-drowningAtlantic City casinos didn’t exactly set the world on fire during the first quarter of 2014, as even the casinos that made money made less than they did during the same period last year. Overall revenue at the 11 casinos for which year-on-year comparisons are available came to $868m, down just 1.5% from $881m last year. But this year’s figure includes $31.7m in new revenue from online gambling, making the actual shortfall significantly higher.

Just four casinos posted revenue gains, with Revel’s 23.9% improvement the star performer. The Golden Nugget was close behind, up 23.7%, while the Tropicana rose 10.4% and the Borgata nudged up 1.6%. Five casinos posted operating profits, although the Tropicana’s was skewed due to a favorable property tax settlement. The Borgata’s profit fell 28%, Harrah’s was down 24%, Caesars Atlantic City dipped 49% and the Showboat tumbled nearly 77%.

Analysts have fingered the Trump Plaza and Caesars Entertainment’s Showboat as the casinos most likely to join the Atlantic Club in permanently closing their doors, especially after Caesars CEO Gary Loveman used his company’s most recent earnings report to publicly muse about examining “options to reduce capacity” in the struggling market.

Speaking at this week’s East Coast Gaming Congress, UBS analyst Srihari Rajagopalan referenced the Atlantic Club’s closing, saying people were witnessing the market “right-size, which is a positive.” While Florida’s Hard Rock International is mulling acquiring the struggling Revel, Credit Suisse Securities’ Joel Simkins offered this advice to anyone thinking about taking a chance on acquiring either the Plaza or Showboat: “Don’t do it.”

Meanwhile, figures from the New Jersey Division of Gaming Enforcement show Caesars interactive Entertainment New Jersey (CIENJ) posted a net loss of $7.1m for the quarter. While CIENJ-powered sites have consistently ranked second on the monthly revenue charts behind the Borgata sites, CIENJ’s $5.9m share of online revenue was undone by startup and marketing costs, including $8.8m for advertising. Counting the month or so following the late-November launch of New Jersey’s online gambling market, CIENJ’s total net loss comes to just over $9m.