2020 Atlantic City Outlook: Can Town Support Nine Casinos?
Posted on: December 31, 2019, 12:33h.
Last updated on: December 31, 2019, 12:52h.
Atlantic City is entering a critical year, as the East Coast gambling mecca will face its fate in determining if it’s capable of supporting nine casino resorts.
2019 marked the first full year Atlantic City guests had nine options on where to place their bets. Hard Rock, the former Trump Taj Mahal, and Ocean Casino Resort, the former Revel, both opened in June of 2018.
Land-based gross gaming revenue (GGR) is up January through November at $2.47 billion – a 7.1 percent increase. Tack on internet gambling and sports betting, and the Atlantic City gaming industry has won more than $3 billion.
But there’s a darker side to the casino cash being kept by the house. Gross operating profits – the measure of each property’s profitability when including gaming and resort operations – are down. And many experts question whether all nine casinos will survive 2020.
The upside to Atlantic City’s expanded gaming market is more jobs. As of December 1, Hard Rock and Ocean Casino had a payroll of 6,675 workers.
Atlantic City’s casinos employ 26,804 people. However, that’s down nearly four percent from a year ago – a reduction of 1,006 jobs.
After a hiring frenzy because of Hard Rock and Ocean Casino, the properties have right-sized their labor forces. “As training cycles are completed and the variables gain clarity, organizations will adjust to optimal levels of staffing based on operational demands,” said Rummy Pandit, executive director of the Lloyd D. Levenson Institute of Gaming, Hospitality and Tourism at Stockton University in New Jersey.
Casinos across town are trying to reduce overhead, as their gross operating profits continue to shrink. Data supplied by the New Jersey Division of Gaming Enforcement (DGE) reveals that profits have declined through three quarters this year at Bally’s (-27.4 percent), Caesars (-23.2 percent), Golden Nugget (-1.5 percent), Harrah’s (-24.4 percent), Resorts (-11 percent), and Tropicana (-4 percent).
Borgata, at a profit increase of 2.3 percent, is the only Atlantic City casino to increase its bottom line in 2019. Collectively, gross operating profits total $484.5 million – a 4.5 percent decline compared to the same nine months in 2018.
Hard Rock CEO Jim Allen and billionaire Golden Nugget owner Tilman Fertitta have both expressed their distress regarding Atlantic City’s economic outlook.
Fertitta believes the city is only capable of supporting seven casinos, while Allen said earlier this month, “Candidly, we’re disappointed with Atlantic City. There’s no other way to say it.”
Hard Rock International, owned by the Seminole Tribe in Florida, dumped more than $500 million into renovating the resort from its Indian-themed Taj Mahal décor. Allen blamed local officials for not better supporting its investment.
It’s a shame that they did not rise to the occasion of a company coming in, putting $500 million into the city,” Allen declared.
David Schwartz, a gaming expert at the University of Nevada Las Vegas, says time will tell Atlantic City’s future.
“I think we will see the city continue to adjust to the new gambling landscape. Sports betting and online betting will continue to grow in importance,” Schwarz told the AP this week. “Anything that gives people a reason to visit Atlantic City in person when there are plenty of places to gamble closer to home – including home – will be key.”