Atlantic City casinos reported a surge in operating profit in the first quarter of 2017, adding weight to theories that the market has ‘right-sized’ after years of turmoil.
Figures released this week by the New Jersey Division of Gaming Enforcement (DGE) show Atlantic City casinos’ total gross operating profit rose 30.4% year-on-year to $139.4m in the three months ending March 31. Revenue rose 8.6% to $816.7m, thanks to an 11% rise in gaming revenue, while room revenue was up 4.2% as occupancy improved 7.3 points to 81.1%.
As ever, the Borgata bogarted the profits, claiming $61.4m, a gain of nearly 29%. The next closest competitor was Harrah’s at $23.8m, and it was going in the opposite direction, netting 11.3% less than last year. The biggest gainer was Resorts Casino Hotel, which reported a profit of $4m, up from just $500k last year.
Of the two operators that break out their online gambling business as a separate entity, Caesars Interactive Entertainment New Jersey saw its profit fall 6.6% to $2.3m, while Resorts Digital reported a $570k profit from a $1.1m loss a year ago.
The DGE cautions that the overall market’s year-on-year comparisons apply only to the seven casinos that were open in both Q1 2017 and the same period last year, thereby eliminating the impact of the Trump Taj Mahal, which closed its doors last October.
The Taj Mahal was the fifth AC casino to close since 2014, a Darwinian purge that followed years of declining interest in the seaside gaming hub. AC’s gaming revenue peaked in 2006, the same year neighboring Pennsylvania authorized its first casino, and the downward spiral only continued from there.
But AC posted a year-on-year annual gain in 2016 – thanks mainly to contributions from New Jersey’s regulated online gambling market – and 2017 has started off on similarly positive footing.
New Jersey Casino Control Commission chairman Matt Levinson celebrated the Q1 profit rise, saying the numbers were further evidence that “the industry has stabilized and operators are showing healthier bottom lines.”
Which is all the more reason why the seven surviving casinos might not be overly thrilled about Hard Rock International‘s purchase of the Taj Mahal, which the company plans to open in summer 2018 following a nine-figure makeover. So will the new Hard Rock Hotel & Casino Atlantic City enlarge the pie, or just nibble away at everyone else’s slice?
