Atlantic City’s nine casino resorts collectively had a 4.6% lower operating profit in 2022 than the previous year to testify to the long-lasting impact of the 2020 COVID-19 outbreak on the profitability of the gambling industry in the city, Associated Press reports.
The New Jersey Division of Gaming Enforcement released the profitability figures for the city’s nine casinos Monday showing the aggregated operating profit of the casinos settled at $ 731.2 million in 2022, which is 4.6% lower level than the earnings collectively made in 2021 by Atlantic City casino industry.
Eroding Profits:
Only two of the nine casino facilities recorded a higher operating profit than in 2021 and only four casinos had larger profit than the 2019 levels. Mark Giannantonio, president of Resorts Casino and the Casino Association of New Jersey, reportedly said that the inflationary pressures affected casinos’ financial results last year. “You have revenue that’s not growing fast enough, and couple that with expenses in some categories that are up 20 to 25% or more, and you can see how quickly this can erode profits,” he reportedly said.
Associated Press indicates that the last year’s union contract became effective in Q3 2023 to drive many hotel and casino workers to request salary raises. Higher labor costs might have pushed the revenues down, but Giannantonio reportedly said the pressure on earnings was not solely due to higher labor costs.
COVID-19 Impact:
It seems that the impact of the pandemic is still very strong and the industry struggles to get back in shape. Also, the online casino performance shows that the customers who moved online during the pandemic might have continued to use online gambling destinations rather than in-land casinos thus affecting the turnover and revenues of the latter even after the pandemic.
Hotel room costs in Atlantic City’s casino facilities ranged from $ 126.34 at Resorts to $265.75 for an overnight stay at Ocean in 2022. Hard Rock had the highest occupancy rate of 88.6%, while the nine casinos collectively had an average occupancy rate of 73.4% in 2022, which is 6% higher than the previous year.
Best Performing Casinos:
As mentioned above, Hard Rock and Ocean performed better in 2022 than in 2021, with Hard Rock earning $128 million, or around 20% over the previous year, and Ocean earning $96.2 million, or 5.5% more than in 2021. Also, four casinos – Hard Rock, Ocean, Resorts, and Tropicana – had a better 2022 performance in terms of the revenue generated through their operations than in the pre-pandemic 2019.
Online vs In-Land Performance:
Bally’s generated gross revenue of $11.3 million in 2022, $1.8 million or 18% less than in 2021, Borgata was down by 19.4%, Resorts almost 24% down, while Caesars, Harrah’s, and Tropicana recorded a decline ranging from 2 to 10 percent. On the other hand, online casino companies Caesars Interactive Entertainment NJ and Resorts Digital performed much better than the in-land entities. Caesars earned $32.7 million almost doubling its last year’s earnings, and Resorts Digital recorded a $15.4 million revenue to record a 2.8% y-o-y growth.
Earnings before interest, tax, depreciation, and amortization (EBITDA) are considered the operating profit, or gross generated revenue by the industry achieved over a certain period. In 2022, this value for the Atlantic City casino industry was 4.6 % lower than in 2021.
