Atlantic City casinos defied expectations by posting a rise in their third-quarter operating profits, the market’s best showing in years.
Figures released Friday by the New Jersey Division of Gaming Enforcement (DGE) show AC’s nine casino operators generated net revenue of just under $929m in the three months ending September 30, up 2.7% from the same period last year.
Operating profits shot up 12.5% to $239.4m, the first overall profit gain since AC welcomed two new operators – Hard Rock Atlantic City and Ocean Casino Resort (OCR) – in June 2018. However, year-to-date operating profit remains down 4.5% at $484.6m due to the profit declines in both Q1 and Q2, with Q1’s nearly 30% decline weighing particularly heavy on the year-to-date results.
A good chunk of Q3’s profit rise was due to those two new casinos, which were still snowed under with opening costs in Q3 2018. Hard Rock reported its Q3 profit up 195.4% to $24.4m while OCR’s profit soared 1,660% to $10.2m.
New Jersey’s online gambling and sports betting operations also juiced the Q3 profit figures, as evidenced by online-only operator Caesars Interactive Entertainment, which saw revenue jump nearly 167% to $3.1m. (Resorts Digital spoiled that narrative by reporting a 16.3% profit fall to just $1.7m.)
It was a far different story at Caesars Entertainment’s land-based casinos, all three of which reported profit declines. Bally’s posted the biggest percentage decline, falling 22.6% to $18.4m, while things weren’t much better at Caesars AC ($23.4m, -18.4%) or Harrah’s ($33m, -8.2%).
The market-leading Borgata posted the biggest profit at $69.85m (+10.6%), the Tropicana rose 2% to $32.4m, the Golden Nugget gained 30% to $17.75m and Resorts Casino Hotel brought up the rear with $9.3m (+1.7%).
AC casinos saw a hotel occupancy rate of 90.8%, up 2.6 points year-on-year. Third-party business sales also improved, rising 4.9% to $80.5m.
Given the current growth of the state’s online casino/betting operations, AC might yet turn a collective profit rise when the full year is through. But it remains to be seen if Q3 represented a one-off or if the market can truly support nine casinos in the long run, a view not shared by some AC operators.