Atlantic City Casino Profits Take a Fall in Q1
Atlantic City's casinos are grappling with a decline in profits for the first quarter of 2024. Figures released by the New Jersey Division of Gaming Enforcement on May 22 show a nearly 10% decrease in collective gross operating profit compared to the same period in 2023.
The Golden Nugget casino in Atlantic City at dusk. (Source: Golden Nugget)
LISTEN TO THIS ARTICLE:Atlantic City's nine brick-and-mortar casinos saw a combined profit of $140.4 million, down from $155.4 million when Internet-only gambling entities are factored in. This news comes as a surprise to some, considering Atlantic City's casino industry has enjoyed a period of revitalization in recent years.
Related: Atlantic City Casinos Provided Close to $500M in Tax Revenue Last YearRising operational costs are a strong contender for the decline. A recently negotiated labor agreement that provides casino workers with higher wages has undoubtedly impacted profit margins. Additionally, inflationary pressures on other operational expenses are likely contributing factors.
A Look at Individual Performances
Bally's took a significant hit, with a $2.5 million loss compared to a profit of $88,000 a year ago. Resorts Casino Hotel also saw a loss increase, going from $284,000 in the red to $1.2 million.
Other casinos faced varying degrees of decline. Golden Nugget's gross operating profit took the biggest tumble, dropping a staggering 51.7% to $2.3 million. Tropicana also saw a significant decrease of 25.4%, resulting in a profit of $12.5 million.
Harrah's profit dipped by 12.3% to $16.9 million, while Borgata experienced a 10.1% decline, landing at $51.7 million. Caesars rounded out the list with a 7% decrease, bringing their profit to $10.5 million.
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However, not all casinos faced financial setbacks. Hard Rock saw an 18.3% increase in gross operating profit, reaching $26.2 million. Ocean Casino Resort also reported a slight increase of 1.2%, bringing its profit to $24 million.
These outliers suggest that some casinos are navigating the economic landscape more effectively than others. Perhaps these successful operators have implemented cost-saving measures or found ways to attract new customers, highlighting the importance of strategic adaptation in this competitive market.
Only a Slight Bump in the Road
Industry leaders are expressing cautious optimism about the future. James Plousis, chairman of the New Jersey Casino Control Commission, views the higher labor costs as an investment in the industry's workforce. He believes this will lead to a more stable and productive long-term environment.
Mark Giannantonio, president of Resorts Casino Hotel and the Casino Association of New Jersey, aligns with this perspective, suggesting that inflation is a temporary hurdle. Both leaders are confident that Atlantic City's casinos are well-positioned to rebound, potentially emerging stronger with a more satisfied workforce.
The coming quarters will be critical in gauging the true impact of these first-quarter figures. Continued monitoring of profit trends will provide a clearer picture of the industry's health. If the decline persists, a more significant adjustment of strategies might be necessary for casino operators to adapt to the evolving economic climate. However, if this dip proves to be temporary, Atlantic City's casinos could be poised for continued growth, potentially entering a new era with a revitalized workforce and innovative strategies.
Furthermore, it's important to consider external factors that might be influencing casino profits. Competition from surrounding states with legalized gambling could be playing a role. Additionally, the ever-growing popularity of online gambling platforms might be drawing away some customers. Understanding these external pressures will also be crucial for Atlantic City's casinos to chart a successful course forward.
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