Atlantic City’s casino profits continued to shrink as the gaming revenue pie is sliced ever thinner to accommodate the market’s two new and very hungry hippos.
On Thursday, the New Jersey Division of Gaming Enforcement (DGE) released its second quarter financial results for Atlantic City’s nine casinos, which saw net revenue rise 18.2% to $806.8m in the three months ending June 30. However, those same nine venues reported gross operating profit falling 6.8% to $159.3m.
The picture is even worse when one includes the Q1 results, which were particularly dire. Over the first half of 2019, revenue is up 17.8% to $1.51b while profit is down 16.8% to $245.1m. Glass half-full types will point to the fact that Q2’s profit decline slowed dramatically from the 29.6% decline reported in Q1.
AC’s two newest properties – the Hard Rock Atlantic City and the Ocean Casino Resort – were only open for a few days in Q2 2018, so their year-on-year comparisons are meaningless. But all seven of the other properties that were open in both periods reported falling revenue, while only the market-leading Borgata casino reported a profit gain, albeit a minor one (+4.7%).
The Borgata accounted for one-quarter ($202m) of all Q2 revenue, while the Hard Rock ranked second with an impressive $103.7m. Harrah’s ranked third with $96.4m.
The biggest revenue decliners were Caesars (-11.2%), the Golden Nugget (-10.6%) and Harrah’s (-9.3%), while the same trio also led the profit plungers: Caesars (-33.7%), Nugget (-28.8%) and Harrah’s (-27%).
However, while all nine casinos reported profit declines in Q2, Ocean Casino Resort was the only property to post an actual operating loss (-$1.2m) during the quarter (the company has been a bit distracted this year). The Borgata ranked first on the profit chart with $55.4m, followed by Harrah’s ($23m) and the Tropicana ($22.6m).
AC’s hotel occupancy rate was 81.5% in Q2, down 3.3 points year-on-year. For the first half of the year, occupancy is down 4.3 points to 77.1%.
Ocean Casino Resort led Q2’s occupancy chart with an impressive 91% (despite having the second-highest average room rate), with Caesars not far behind at 89.5%, so the latter property’s issues appear to involve people checking in and then doing stuff elsewhere in AC. The Nugget was the occupancy bottom feeder at 70.5%.
Interestingly, the two online-only entities tracked by the DGE – Caesars Interactive Entertainment New Jersey and Resorts Digital – each reported revenue rising nearly one-third (the state’s online gambling market has been on fire this year. CIENJ’s operating profit was up 71.6% to $5m while Resorts improved nearly 400% to an admittedly minor $1.95m.