Posted on: May 24, 2022, 12:31h.
Last updated on: May 23, 2022, 04:20h.
Eight of the nine Atlantic City casinos were profitable in the first quarter of 2022, the lone exception being Bally’s, which is amid a $100 million renovation.
The New Jersey Division of Gaming Enforcement (DGE) on Monday released Q1 gross operating profit reports for each of the nine casinos. Combined, the nine properties reported profits of approximately $155.6 million on net revenue of $719.8 million.
Casino profits for January through March of 2022 bested the same three months in 2021 by 63%. The first quarter also represented a 79% surge on Q1 in pre-pandemic 2019.
While Bally’s wasn’t profitable primarily because of its ongoing spending to rejuvenate the property, all nine casinos reported increases in year-over-year net revenue — a key metric of business in the beach town.
The casino industry’s recent positive momentum as a destination resort is continuing,” James Plousis, chair of the New Jersey Casino Control Commission, told Casino.org in prepared remarks. “Every casino reported an increase in net revenue in what is typically the industry’s slower season.”
Gross operating profits reflect earnings before interest, taxes, depreciation, amortization, charges from affiliates, and other miscellaneous items. The DGE explains that the benchmark is a widely-accepted measure of profitability in the Atlantic City gaming industry.
Borgata Dominates, Hard Rock and Ocean Surge
MGM Resorts’ lone property in Atlantic City, the Borgata, continues to dominate the nine-casino market. The Marina District resort turned a profit of more than $45.8 million in quarter one, which was 58% better year-over-year.
Hard Rock and Ocean Casino, which both opened in June of 2018, saw their fortunes surge compared with 2021. Q1 profits for the north Boardwalk neighbors respectively skyrocketed 213% and 133%. Hard Rock reported a $26.7 million operating profit, and Ocean a little more than $18.5 million.
Tropicana was also a big winner. The Boardwalk casino saw its profits climb 22% to $19.8 million. Harrah’s profits totaled $15.9 million, Caesars $10.6 million, Golden Nugget $5.6 million, and Resorts $536,000. Bally’s reported an operating loss of $6.8 million.
Caesars Entertainment, Golden Nugget, and Resorts report their iGaming operating profits separately. Caesars’ iGaming entity — Caesars Interactive Entertainment New Jersey (CIENJ) — reported a profit of $7.8 million. Golden Nugget Online Gaming’s (GNOG) profit was $6.7 million, and Resorts Digital’s profit was $4.1 million.
The first-quarter profit reports for the Atlantic City casinos show that the properties are, at least for the moment, financially sound. But the busy summer season will test their fiscal health.
A labor shortage that is increasing wages, paired with ongoing inflation, will make the summer a difficult operating environment. Jane Bokunewicz, director of Stockton University’s Lloyd D. Levenson Institute of Gaming, Hospitality and Tourism, says the second and third quarters will be telling for the Atlantic City gaming industry.
How well operators can keep up with this demand, given the labor supply, rising wages, and product costs, will determine if recent gross operating profit performance will persist,” she told the Associated Press.
The fruitful Q1 performance, Bokunewicz said, suggests that the casinos have managed to streamline their operations with fewer employees. Many of those job cuts have been with housekeeping, as Atlantic City casinos continued to attract fewer overnight guests.
Casino hotel occupancy in Q1 2022 was 63% for the 15,109 guestrooms at the nine properties. The average nightly rate was $152.
In Q1 2019, hotel occupancy for those same casino accommodations was almost 73%. However, the rooms went considerably cheaper, at an average rate of $126.