Atlantic City Q1 casino earnings down nearly 12 percent

May 22, 2018 - 3:37 pm

ATLANTIC CITY, N.J. (AP) — Atlantic City's seven casinos all remained profitable during the first quarter of this year, but those profits are shrinking even as two new competitors prepare to join the market.

Figures released Tuesday by the state Casino Control Commission show Atlantic City's casinos posted a gross operating profit of $123.6 million, down 11.7 percent from the first three months of 2017.

The figures are significant because, while all seven casinos are currently profitable, there is concern over whether two new casinos will re-expand the market to an unsustainable size.

Five of Atlantic City's 12 casinos have closed since 2014, and the survivors have done well in a slimmed-down market.

But on June 28, the former Trump Taj Mahal will reopen as Hard Rock, and Revel will reopen as the Ocean Resort Casino.

Some analysts believe the re-expansion of the market will squeeze profit margins for everyone, making it harder for all nine of the casinos that soon will be operating to survive over the long run. Others are optimistic the new casinos, particularly Hard Rock, with its global music-themed resorts, will succeed in bringing new customers to Atlantic City and not just cannibalize the existing market.

Gross operating profit reflects earnings before interest, taxes, depreciation, and other charges and is a widely-accepted measure of profitability in the Atlantic City gambling industry.

The first quarter of this year included numerous winter storms that held down visitation to Atlantic City casinos.

"The numbers make it pretty clear it wasn't a great quarter for the casinos," said James Plousis, chairman of the casino commission. But he said he is optimistic about the recent U.S. Supreme Court decision allowing states to legalize sports betting, and about the impending reopening of two of the shuttered casinos.

The Borgata had the highest operating profit for the quarter at $45 million, but that was down more than 27 percent from the same period last year.

Harrah's was next at $28.4 million, up 18.7 percent from a year ago, and Tropicana was third at $17.4 million, up 6.5 percent.

Caesars had an operating profit of $12.5 million, but that was down 38 percent from the first three months of last year. The Golden Nugget's $10 million operating profit was up 61.5 percent from a year ago.

Bally's, at $6.2 million, was up 38.2 percent from last year's first quarter, and Resorts fell to a profit of $1.6 million, down from $4 million in the same period last year.

Among internet-only entities, Caesars Interactive-NJ had an operating profit of $2.9 million, up nearly 39 percent from last year, and Resorts Digital fell to an $815,000 operating loss after a $570,000 operating profit in the first quarter of 2017.

Atlantic City's casinos collectively had an occupancy rate of nearly 78 percent for the quarter, with the average room renting for $121.47. Resorts had the lowest average room rate at $70.73, while Borgata had the highest at $175.31.

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Follow Wayne Parry at http://twitter.com/WayneParryAC

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