By Annie Ross
Atlantic City casinos are suffering again from a dip in profits caused by the greed of opening too many places to bet.
The New Jersey Division of Gaming Enforcement reports that the nine casinos saw their gross operating profit decline by nearly 30% in the first quarter of this year compared to the same period last year, when there were only seven. The casinos collectively reported an $87 million profit in the first three months of this year.
Gross operating profit reflects earnings before interest, taxes, depreciation, and other charges, and is a widely accepted measure of profitability in the Atlantic City casino industry.
When the Hard Rock and Ocean casinos reopened last June, there was concern that the extra competition might drive down profits.
So far, that has proven to be the case. Hard Rock, the former Trump Taj Mahal, and Ocean Casino Resort, the former Revel, both opened on the same day last year. While they added thousands of jobs and additional hotel rooms to the market, they also spread the resort’s gambling business a bit thinner.
For all of 2018, gross operating profit was down 15%.”While the market has grown, profit margins remain tight, reflecting the competitive landscape,” said James Plousis, chairman of the New Jersey Casino Control Commission.
But he cited other statistics showing that hotel occupancy was up nearly 19% and sales tax revenue were up almost 18% for the quarter.
In the first quarter of this year, only Resorts showed an increase in gross operating profit, up nearly 80% to $3 million. But the large percentage increase is mainly because Resorts’ first quarter profit last year was so small.
The two newest casinos both reported operating losses as they continue the expensive process of promoting themselves and spending money to try to attract customers. Hard Rock showed a loss of $6.1 million for the quarter, and Ocean lost $10.3 million, although its acting CEO Eric Matejevich said the casino had returned to profitability in April.
Bally’s reported the largest percentage decrease in operating profit, down more than 54% to $2.8 million. Harrah’s was down nearly 42% to $16.5 million; Caesars was down 13.6% to $10.8 million; the Borgata was down 12% to $39.7 million; the Golden Nugget was down 5.6% to $9.4 million, and Tropicana was down 5.3% percent to $16.5 million.
Among internet-only entities, Resorts Digital swung from an $815,000 first quarter loss last year to a profit of $1.8 million in the first quarter of this year. Caesars Interactive Entertainment-NJ saw its profit decline by 5.7% to $2.7 million.