Atlantic City Casino Profits Decline in 2023

In 2023, the nine casinos in Atlantic City collectively reported a gross operating profit of $744.7 million, representing a 1.6% decline from the previous year, according to the latest figures from the New Jersey Division of Gaming Enforcement. When including two internet-only entities affiliated with some of the casinos, the overall decline in profitability reaches 4.1%, with earnings totalling $780 million. It is worth noting that while all nine casinos remained profitable, only three saw an increase in profitability.

The rise of online gambling has been touted as a potential saviour for the struggling Atlantic City casino industry. However, the figures indicate that online gambling alone was not sufficient to offset the decline in overall profitability. While online gambling revenue did skyrocket, reaching impressive numbers, the in-person casino segment continued to slump.

Gross operating profit, a widely-accepted measure of profitability in the casino industry, takes into account various expenses such as depreciation, taxes, and interest. Despite the growth of online gambling, this measure suggests that the cost of operating casinos in New Jersey has increased. Jane Bokunewicz, director of the Lloyd Levenson Institute at Stockton University, points out that higher operational costs, including increased wages and more expensive goods, have contributed to the decline in profitability.

Several factors may have contributed to the decline in Atlantic City casino profits in 2023. One possible reason is that consumer spending has not kept pace with rising operational costs. While the industry hoped for a significant increase in consumer spending, inflation and increased consumer prices have tightened visitors’ purse strings. Operators have had to dig deeper into their pockets to cover costs, affecting overall profitability.

Another factor is the ongoing battle over whether smoking should be allowed in Atlantic City’s casinos. A group of casino workers, along with the United Auto Workers Union, filed a lawsuit to overturn the provision in New Jersey’s indoor smoking law that exempts casinos. While the casinos argue that ending smoking will place them at a competitive disadvantage compared to neighbouring states, workers cite studies showing that casinos in smoking-ban states are outperforming their counterparts.

Analyzing the individual performance of Atlantic City’s casinos provides further insights into the overall decline in profitability. The Borgata, with an operating profit of $226.1 million, emerged as the most profitable casino in 2023, experiencing a 1.3% increase from the previous year. Hard Rock, Ocean, and Tropicana also saw higher profits compared to 2019, before the COVID-19 pandemic. However, the remaining casinos experienced varying degrees of decline in profitability.

The statistics also reveal the occupancy rates of casino hotels in Atlantic City. In 2023, the average occupancy rate stood at 73%, marking a slight 0.4% decline from the previous year. Hard Rock boasted the highest average occupancy rate at 88.8%, while Golden Nugget had the lowest at 53.8%. The average room rate in Atlantic City’s casino hotels was $180.67, with Golden Nugget offering the lowest average rate at $123.31 and Ocean offering the highest at $270.31.

The decline in Atlantic City casino profits in 2023 highlights the challenges the industry faces. While online gambling has shown promise, it is not a panacea for the struggling in-person casino segment. Rising operational costs, sluggish consumer spending, and the ongoing debate over smoking regulations pose significant hurdles for the industry.

To remain competitive and attract visitors, Atlantic City’s casinos will need to adapt to the changing landscape. This may involve finding innovative ways to increase consumer spending, implementing cost-cutting measures, and diversifying their offerings beyond traditional gambling. The ability to navigate these challenges will determine the future success of Atlantic City’s casino industry.