Atlantic City Casinos Lose $112 Million In The 2nd Quarter of 2020 – WHAT?!
The Division of Gaming Enforcement (DGE) has just released the Atlantic City casino revenue figures for the second quarter of 2020. This is the period starting April 1 and ending June 30.
Longest Atlantic City casino shutdown since 1978
When the still ongoing COVID-19 pandemic compelled Gov. Murphy to order all nine Atlantic City casinos to close on March 16, how long the unprecedented casino closures would last was anyone’s guess. NJ online casino gambling continued to operate as usual. However, Gov. Murphy did not allow any Atlantic City casinos to reopen until the July 4 weekend.
Eight of the nine AC casino hotels did reopen to the public on July 2 or 3. However, Borgata Hotel Casino & Spa, which originally planned to reopen on July 6, elected to wait until July 26.
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This meant that over the entire duration of the second quarter of 2020, all nine Atlantic City casinos remained shut down completely.
Accordingly, it comes as no surprise that NJ casino revenue for that period fell way down. In fact, according to an August 24, 2020 article on ThePressofAtlanticCity.com, instead of registering a profit, the nine Atlantic City casino properties combined showed a gross operating loss of $112 million. This was in striking contrast to the $159 million operating profit reported for the second quarter of 2019–a decrease of 170.4 percent.
Huge operations & reopening preparation expenses
Casino Control Commission Chairman James Plousis commented that the huge expenses the casinos incurred to prepare a safe environment for employees and guests on reopening dipped further into their operating profits.
The second-quarter figures likewise came as no surprise to Jane Bokunewicz, Coordinator of the Lloyd P. Levenson Institute of Gaming, Hospitality, & Tourism at Stockton University.
Bokunewicz pointed out that room, food, and beverage expenses for the Atlantic City casino properties during the 107 days all of them were closed decreased.
However, AC casino property upgrades and other operating expenses such as utility costs, recleaning each facility from top to bottom, and paying security, surveillance, and maintenance workers continued.
“Additionally, according to Bokunewicz, “some casinos continued to pay employee health care benefits and allowed employees to use accrued benefit time during the shutdown.”
Golden Nugget Atlantic City Casino was the one exception
Golden Nugget was the only Atlantic City casino to report a second-quarter gross operating profit. According to the DGE, Golden Nugget reported just over a $3.1 million operating profit.
The fact that this casino was still able to show a profit even while the Atlantic City property remained closed presumably reflected the exceptionally strong performance of Golden Nugget Online Casino.
Comparison with the figures for the first quarter of 2020
Gross operating profits for the Atlantic City casinos had already dropped during the first quarter of 2020. During the first two months—January and February—the Atlantic City casinos remained open the entire time.
However, in March, they were open only for half of the month, and March Madness was completely canceled. Gross operating profit for the period declined by 65.4 percent from 2019.
Atlantic City Casinos revenue takes a nosedive in 2020
Atlantic City casino net revenue includes their total profit from gaming, hotel stays, food and beverage, and other sources of income combined. That figure decreased nearly 85 percent in the second quarter of 2020 compared to the $796.8 million that the Atlantic City casino gambling industry reported for the same three-month period in 2019. The total for the second quarter of 2020 only amounted to $121 million.
Of course, since no hotel guests were permitted during the entire time the respective casinos remained closed, revenue from hotel occupancy amounted to zero.
Revenue from online casino gaming and limited sports betting helped. But it didn’t contribute enough to offset the ongoing expenses.
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Looking ahead to the third quarter
The July, August, and September figures should be significantly better, especially since the Atlantic City casinos were able to reopen in time for the July 4 holiday weekend and the peak July through Labor Day tourist season.
But even so, the state’s mandated 25 percent capacity restrictions and the inability of the casinos to offer indoor dining, drinking, and smoking or more than a modicum of entertainment continue to impact visitation levels and total gaming revenue.