Atlantic City Casino Profits Drop 37% In The 3rd Quarter Of 2020

Barbara Nathan Updated on December 7, 2020
atlantic city casinos

An unprecedented mandatory shutdown of the Atlantic City casinos for more than 100 days is not the only reason why Atlantic City casino profits continue to be way down in the third quarter of 2020.

On March 16, 2020, Gov. Murphy ordered all nine Atlantic City casinos to close and remain closed until further notice to help stop the spread of the coronavirus. No casinos were permitted to reopen before July 2. However, since reopening, the casinos’ ability to recover lost revenue has been slow. The latest published reports on 3rd quarter Atlantic City casino profits reflect that.

Reduced attendance, fewer amenities, and a recent rise in new virus cases have all negatively impacted 3rd quarter Atlantic City casino profits

All nine casinos reopened in July, although the Borgata postponed its reopening until July 26. However, attendance was and still is restricted to 25 percent of capacity. Many other restrictions remain in effect as well.

For example, initially, no indoor dining or drinking was permitted at all. Now they are permitted but at 25 percent of capacity, and all service ceases at 10 p.m. At fine dining establishments, reservations at least a week in advance are mandatory, while getting service at a casual eatery is even more of a hassle. Many of these places remain closed. Others are only open during limited hours or offer take-out only. Long lines are the rule rather than the exception.

Unless you’re a top tier player, another place where you’ll almost invariably encounter horrendous lines is at the hotel check-in desk.

Also, every time you visit, the reminders that COVID-19 has not gone away are everywhere. Most of the properties check your temperature as soon as you enter. Masks are mandatory at all times (except when eating or drinking), and social distancing is vigorously enforced at every property.

While the properties are making an effort to provide some in-house entertainment, sadly, the big arenas that would ordinarily attract world-class performers remain closed.

Fewer game options

The bottom line is that patrons find little to do at the casinos besides gamble. But that, too, is often not as easy as you might think.

Even with many slot machines closed, the slot area is so uncrowded, players should have no trouble finding a seat at the machine of their choice. However, small stakes blackjack players are not so lucky.

As for poker, be forewarned. As of this writing, the Borgata poker room, which reopened on Oct. 21, is still the only one of the five Atlantic City casino poker rooms that is open. Furthermore, only 30 of the room’s 77 tables are open, and each has a cap of seven players.

There are many more than 210 people eager to get into a game, especially on weekends, so, just as you might expect, the lines and waiting times are unreal. People start arriving at the crack of dawn for a seat, and by 9 a.m. the most popular games are completely full. There are no seats for spectators. You will get a text message on your cell phone when your seat is ready.

Continued travel restrictions for out-of-towners

Long lines, fewer games, and limited amenities are not the only harsh realities keeping attendance and spending down at Atlantic City casinos. Many out-of-towners have had to put their planned trips to Atlantic City on hold because they live in a state where mandatory travel restrictions are in effect.

The bottom line

Of course, the special health and safety measures casinos have had to take like extra-vigorous cleaning and inserting Plexiglas dividers in table games have significantly increased the casino’s operating costs.

James Plousis, chairman of the New Jersey Casino Control Commission, has acknowledged the added expenses that the Atlantic City casinos have been faced with in order to reopen safely. But he also said that taking these precautions “allowed for responsible management of the casino hotels, minimizing risk and building a foundation for a successful recovery.”

Considering the increased operating costs plus the many reasons mentioned above why attendance has been down, it should come as no surprise at all that Atlantic City casino profits are still down, too. In fact, according to a Nov. 23, 2020 article on ThePressofAtlanticCity.com, 2020 third quarter Atlantic City casino profits fell by more than 37 percent compared to the same period last year.

Collectively, Atlantic City casino profits for the months of July, August, and September 2020 combined amounted to just $150.3 million, as compared to $239.6 million for the same 3-month period in 2019. Of course, there was no pandemic then, and all nine casinos were operating at full capacity.

Only one property, Ocean Casino Resort, reported a better third quarter than in 2019

Gross operating profit refers to the earning of a business before such expenses as interest, taxes, and depreciation. Within the Atlantic City gambling industry, it is a widely accepted measure of profitability

According to the figures that the Division of Gaming Enforcement (DGE) released on Nov. 23, each of the nine AC casinos still reported a gross operating profit for the third quarter of 2020. However, with the sole exception of Ocean Casino Resort, the gross operating profit was less than it was in the third quarter of 2019.

Ocean Casino Resort’s third-quarter operating profit increased from $10.2 million last year to $24.4 million this year.

2020 third quarter Atlantic City Casino Profits by Casino

The following table shows the gross operating profit reported by each casino for the third quarter of 2020 along with the percentage of change from the third quarter of 2019.

 

Casino

Gross Operating Profits For the 3rd Quarter of 2020

Percentage of Change From the 3rd Quarter of 2019

Ocean

$24.4 million

+41.8%

Hard Rock

$20.9 million

-14.3%

Harrah’s

$19.3 million

-41.5%

Tropicana

$18.2 million

-43.8%

Caesars

$17.5 million

-25%

Golden Nugget

$16 million

-11%

Bally’s

$13 million

-8.3%

Resorts

$7.7 million

-16.7%

Borgata

$2.3 million

-97%

Summary and Conclusion

It takes a little digging to find a silver lining beyond this year’s disappointing figures. But actually, there are several positive findings suggesting that the Atlantic City casino industry is finally on the road to recovery and can look forward to a better 2021. Here they are:

  • All nine Atlantic City casinos reported an operating profit for the third quarter of 2020.
  • During the third quarter of 2020, casino hotel occupancy has averaged nearly 73%.
  • While casinos in several states, such as Pennsylvania, after reopening, have again been ordered to close, so far, all of the Atlantic City casinos remain open.
  • Internet gaming revenue for 2020 through October is nearly double that reported for the same period last year.
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