Atlantic City Casinos14% Drop in Profits Amid Economic Pressures

Atlantic City's casinos reported a collective operating profit of $236.5 million in the third quarter of 2024, marking a 13.8% decline compared to the same period in 2023, according to data released by New Jersey's Division of Gaming Enforcement. The figures highlight the ongoing challenges facing the city's gambling industry, as economic pressures, shifting consumer habits, and a lack of major events weigh on profitability.

 

Declining Profits Across the Board

The report revealed that all nine Atlantic City casinos were profitable during the quarter, but only Caesars and Hard Rock managed to grow their profits year-over-year. Industry leader Borgata posted the highest profit at $60 million, though this represented a nearly 18% drop from the previous year. Similarly, casinos such as Ocean, Tropicana, and Harrah's saw double-digit declines in their profits.

“The high costs of operations and the absence of large-scale tourism events like the annual air show and beach concerts impacted revenue streams this summer,” said Jane Bokunewicz, director of the Lloyd Levenson Institute at Stockton University. She also pointed to a $17 drop in average hotel room rates as an indicator of reduced consumer demand.

The broader trend of decreasing profitability aligns with a 9.2% dip in collective operating profits across the first nine months of the year.

 

Online Gambling’s Impact

The rise of online gambling, while lucrative, has shifted the revenue model for Atlantic City casinos. Unlike traditional gaming, online revenues are shared with technology partners and other stakeholders, reducing the casinos’ share of the profits. Internet-only entities also experienced a downturn, with Caesars Interactive NJ and Resorts Digital reporting profit declines of 7.8% and 4.8%, respectively.

Atlantic City's casinos also struggled to sustain non-gaming revenues, traditionally a strong suit during the summer months. Revenue from hotel stays, dining, and entertainment totaled $511.6 million, down 5% compared to the previous year. Hotel performance was mixed, with Ocean Casino Resort commanding the highest average nightly rate at $335.63, while Golden Nugget offered the lowest at $124.70. Hard Rock led in occupancy at 95.1%, contrasting sharply with Golden Nugget's 66.4%.

James Plousis, chairman of the New Jersey Casino Control Commission, cited high operational costs as a significant factor in the profit decline. Additionally, the shift in consumer behavior since the COVID-19 pandemic has reshaped the gambling landscape. While online gambling provides growth opportunities, it also dilutes the profitability of land-based operations.

 

Pressure from continuing high costs can be seen in lower profits compared to the same period last year.

 

Looking Ahead

The profit declines underscore the challenges Atlantic City casinos face in balancing traditional revenue streams with the realities of a digital-first gambling era. With increased competition from neighboring states and the online sector, the city’s gambling industry may need to innovate further to attract visitors and adapt to shifting consumer preferences.

Although Hard Rock and Caesars have managed to buck the trend, the overall picture remains one of caution, with the third-quarter results serving as a reminder of the volatility in the industry. As 2024 draws to a close, all eyes will be on Atlantic City's ability to weather these economic headwinds and reinvent itself in a competitive market.