Atlantic City’s casino sector faced a setback in the first quarter of 2024, with combined profits dropping by nearly 10%, according to public filings. Only two out of the nine casinos reported higher profits compared to the same period last year.
Declining profits in Q1:
The nine casinos collectively recorded a gross operating profit of $140.4 million from January to March 2024, marking a significant decline of 9.6% from the first quarter of 2023. When factoring in internet-only entities, the total profit amounted to $155.4 million, representing an 8.7% decrease from the previous year.
As the Associated Press reports, Jane Bokunewicz, director of the Lloyd Levenson Institute at Stockton University, attributed the sluggish profits to several factors, including “an increase in the cost of doing business, inflation, and a potential shift in revenue mix to operations like lodging and food and beverage that traditionally have narrower profit margins.”
James Plousis, chairman of the New Jersey Casino Control Commission, echoed similar sentiments, citing labor contracts that provided higher wages to casino workers and rising costs of goods as contributing factors.
While some casinos saw an increase in profits, others experienced declines. Hard Rock reported an 18.3% rise in gross operating profit to $26.2 million, while Ocean’s profit edged up by 1.2% to $24 million. However, Bally’s and Resorts posted operating losses of $2.5 million and $1.2 million, respectively.
Challenges and competition:
Atlantic City’s casinos face challenges in maintaining profitability during the winter months and are confronted with the prospect of losing business to potential competitors in North Jersey or New York City. The city’s casino market also contends with competition from neighboring states and impending casino projects in the New York metropolitan area.
New Jersey already faces competition from casinos in close proximity, including those in New York and Philadelphia. Additionally, proposed casino projects in the New York City area, such as an $8 billion casino near Citi Field in Queens and a $12 billion casino at Hudson Yards in Manhattan, pose further threats to Atlantic City’s gambling industry.
Amidst these challenges, a group of casino workers is advocating for a complete ban on smoking in Atlantic City’s casino floors, according to northjersey.com. They have urged state legislators to pass a bill banning smoking and have filed a lawsuit to overturn a law granting casinos an exemption for indoor smoking.
The debate surrounding the smoking ban underscores the complex interplay between public health considerations, industry regulations, and economic interests. As stakeholders continue to grapple with these issues, the outcome of this debate will undoubtedly shape the future landscape of Atlantic City’s bustling casino sector.
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