Atlantic City casino profits up in Q2 but more competition is on the way

atlantic-city-profitsSeven of Atlantic City’s eight surviving casinos enjoyed a profit boost in the first half of 2015, but more regional competition is headed their way.

Figures released on Monday by the New Jersey Division of Gaming Enforcement showed total revenue – including both land-based and online gaming, hotel, food & beverage, et al – at AC’s eight gaming venues rose 2.6% to $875.3m in the three months ending June 30. More importantly, operating profits were up 28.3% to $132.1m.

Of the five casinos to post year-on-year gains, the Borgata led the way, with revenue up 2.8% to $247.4m. The biggest year-on-year improvement came from the Golden Nugget, which gained 16.3% to $71.1m. At the other end of the revenue spectrum, the Trump Taj Mahal fell 12.4%, while Bally’s was down 3.3% and Caesars AC slipped 1.5%.

The Taj was also the only casino to record a profit decrease in Q2, falling a hefty 150% to a net loss of $900k. The Golden Nugget shone in this category as well, with profit up 902% to $7.8m. Resorts also exceeded expectations, boosting profits by 153% to $4.9m.

Overall hotel occupancy was up less than one point to 84% in Q2. Caesars notched the highest occupancy at just under 94% while the Taj struggled to fill 68% of its rooms.

AC’s eight survivors saw their 2014 profits improve 12% last year following the market’s ‘right-sizing,’ which saw four casinos close their doors. But overall revenue last year was down 48% from its 2006 peak, with most of the decline since that 2006 heyday blamed on increased competition in neighboring states like Pennsylvania and New York. And that competition is about to get even tougher.

Earlier this month, Resorts World New York (RWNY) announced that it had installed 60 new video blackjack tables on its casino floor. The Genting-owned property said it expects to add an additional 300 of the virtual dealer machines in the coming months, which could further decrease the need for gamblers to make the trip to Atlantic City.

New York’s nine racinos had been prohibited from offering so-called electronic ‘games of skill’ until the legislature approved their use in this year’s budget. Three other state racinos have already received permission to launch their own video blackjack machines and more venues are seeking similar privileges.

On the day the machines were introduced at RWNY, the New York Daily News quizzed a Brooklyn man about his opinion of video blackjack, and the man said it meant he no longer had to “travel down to Atlantic City to play.” Uh-oh…