Casinos In Atlantic City Beat The Odds With Unexpected Profit Gains
The casinos located in Atlantic City are beating the odds with unexpected profit gains, which were achieved in the third quarter of this year. In fact, the market managed to make one of the highest profits in years.
The New Jersey Division of Gaming Enforcement (aka DGE) issued earnings from a total of nine casinos that are currently operating in Atlantic City. All of them managed to generate net revenue of approximately $929 million in three months — July through September (the last day was September 30). The revenue increased by 2.7 percent compared to the same period of 2018.
Moreover, operating profits increased by 12.5 percent to $239.4 million. It means that this is the first time that casinos in Atlantic City managed to achieve overall profit gain ever since two new casino operators were introduced to the city — Ocean Casino Resort (aka OCR) and Hard Rock Atlantic City. The two casinos were introduced back in June 2018.
Although Q3 was great for casinos in Atlantic City, they are still struggling to improve overall, as Q1 and Q2 hit them pretty bad. Year-to-date operating profit in Atlantic City is still down about 4.5 percent due to losses in the first two quarters. Q1 was pretty heavy for the market in the area, as there has been recorded an overall decline of about 30 percent.
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It was the two new casinos that were the most responsible for the profit rise in Q3 of 2019, despite the fact that they are still burdened by the opening costs from Q3 of 2018. This year, Hard Rock made an increased profit of 195.4 percent, having earned a total of $24.4 million. OCR did do bad as well, as the recorded profit increase for this property was 1,660 percent, earning $10.2 million.
New Jersey is one of the states that completely legalized two additional forms of gambling — online gambling and sports betting. It seems that bettors and online players were also pretty active and made their mark on the reported numbers in Q3 of 2019 as well. The online-only operator Caesars Interactive Entertainment saw its revenue increase up for 167 percent, earning a total of $3.1 million. However, not all online casinos had a profit, as Resorts Digital reported a decline in their earnings of 16.3 percent, earning only $1.7 million.
Although Caesars did pretty well on the web, its land-based casinos told a different story in the Q3, as all three of them reported a profit decline. Bally’s had the highest decline of 22.6 percent, having earned only $18.4 million. Moreover, Caesars Atlantic City had an 18.4 percent decline with $23.4 million earned, and Harrah’s reported a decline of 8.2 percent, earning $33 million.
The highest profit among the individual land-based casinos was posted by Borgata, which is currently the market leader in Atlantic City. Borgata reported a profit increase of 10.6 percent, earning a total of $69.85 million. Other casinos that reported an increase in Q3 compared to the same period last year are Tropicana (two percent increase, $32.4 million), Golden Nugget (30 percent increase, $17.75 million), and Resorts Casino Hotel (1.7 percent increase, $9.3 million).
The hotel occupancy rate in casinos in Atlantic City was approximately 90.8 percent, which is also better compared to the same period last year when it was lower for 2.6 points. Finally, third-party businesses also reported higher sales, with an improvement of 4.9 percent and a profit of $80.5 million. Can Atlantic City make an overall profit rise before 2019 ends?
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