Atlantic City’s casinos experienced a decline in profitability in 2023 compared to the previous year, despite benefiting from the state’s growing online gambling market. The nine casinos collectively reported a gross operating profit of $744.7 million, which was a 1.6% decline from 2022. When including two internet-only entities associated with the casinos, the decline in profitability increased to 4.1% on earnings of $780 million. Only three casinos saw an increase in profitability, indicating that it is becoming more expensive for New Jersey’s casinos to operate.
The rise in online gambling revenue in Atlantic City has not been enough to offset the decline in in-person profits. Higher operational costs, including increased wages and expenses, have forced operators to dig deeper into their pockets. Despite efforts to attract and retain customers through various incentives such as free play, rooms, meals, and drinks, consumer spending has not increased as significantly as the industry had hoped. This trend has raised concerns about the sustainability of profitability in the Atlantic City casino industry.
The ongoing debate over whether smoking should be allowed in Atlantic City casinos continues, with a group of casino workers and the United Auto Workers Union recently filing a lawsuit to overturn a provision in New Jersey’s indoor smoking law that exempts casinos. The casinos argue that banning smoking would put them at a competitive disadvantage compared to neighboring states and could result in revenue loss and job cuts. However, workers point to studies showing that casinos in states with smoking bans are outperforming those that allow smoking.
The Borgata, with an operating profit of $226.1 million, had the highest profitability among the nine casinos in 2023, followed by Hard Rock, Ocean, and Tropicana. Only four casinos had higher profits in 2023 than they did in 2019, before the COVID-19 pandemic. The casinos are also facing the challenge of operating under a contract that granted workers significant pay raises, impacting their overall expenses and profitability. The average occupancy rate for the casino hotels was 73% in 2023, with Hard Rock having the highest average at 88.8% and Golden Nugget the lowest at 53.8%.
Despite the challenges faced by Atlantic City’s casinos, there are opportunities for growth and innovation in the industry. By capitalizing on the booming online gambling market and finding new ways to attract customers, casinos can potentially increase profitability and compete more effectively with counterparts in neighboring states. It will be crucial for stakeholders to work together to address the various issues affecting the industry and ensure the long-term sustainability of Atlantic City’s casino market. As the industry continues to evolve, it will be important to adapt to changing consumer preferences and market dynamics to remain competitive and profitable in the long run.
