The first three months of the year were disappointing to all but two Boardwalk casinos, as the collective showed a combined gross operating profit of $140.4 million, which was a 9.6% drop from the same period last year. Let’s take a closer look at the numbers and analyze their impact on top-rated sportsbooks.
By the Numbers
Despite an average $8 increase in the daily average room rate and selling 10,000 more room nights than in Q1 last year, seven of the nine casinos saw a decrease in profits. The only two Atlantic City casinos that saw a year-over-year increase in profits were the Hard Rock and Ocean.
The Borgata reported the highest Q1 profit of $51.7 million but, as impressive as that looks, it was a 10.7% year-over-year decrease. Hard Rock was second in Q1 profit with $26.2 million and had the highest year-over-year increase, reporting an 18.3% hike compared to last year. Ocean was the only other casino to show an increase, albeit a modest one at 1.2%, with profits of $24.0 million.
Harrah’s Q1 profits have them at No. 4 on the list with $16.9 million but a 12.3% decrease while the Tropicana checked in at No. 5 with $12.5 million but experienced a 25.4% slump. At No. 6 was Caesars with $10.6 million in Q1 profit and a 7% decline from last year.
At the bottom of the Boardwalk properties was Golden Nugget with $2.3 million but a staggering 51.7% decrease followed by Resorts with a $1.2 million loss and Bally’s bringing up the rear with a $2.5 million loss.
Inflationary Blues
Jane Bokunewicz, director of the Lloyd Levenson Institute at Stockton University, which studies the Atlantic City gambling market, cited several factors as to why most of the Boardwalk properties struggled in Q1, including “an increase in the cost of doing business, inflation, and a potential shift in revenue mix to operations like lodging and food and beverage that traditionally have narrower profit margins.”
James Plousis, chairman of the New Jersey Casino Control Commission, noted the labor rate had increased dramatically due to the new contracts the unions signed last year that are taking a bite into the properties’ bottom lines.
However, there are existential threats to Atlantic City gaming that come from the proliferation of casinos cropping up in neighboring states. Moreover, the specter of three downstate casinos yet to be built in New York is also on the minds of Boardwalk stakeholders.
Smoke Signals
The news was not amenable to the smoking ban contingent, many of whom are those who work at the casinos and want smoking eliminated for health reasons. Although the nine Boardwalk casinos are exempt from the state’s smoking ban in public areas, only 25% are designated smoking areas while the remaining 75% are non-smoking.
Atlantic City casino operators cite studies that have concluded a total smoking ban would drive customers who smoke into the arms of neighboring states whose casinos allow smoking. A Bally’s executive, Vice President Craig Sculo of Bally’s Twin River Lincoln in Rhode Island, spoke about such an example in Louisiana where a casino banned smoking but the decline in business was so severe that they reintroduced the smoking sections.
“Revenues declined, almost immediately double-digit. Local government again stepped in, reintroduced smoking, not only has that decline stopped, that property is now performing at or better than Shreveport competition,” said Sculo.
