Atlantic City First-Quarter Profits Soar

Despite Covid-19 restrictions, Atlantic City casinos reported gross operating profits of $95 million for the first quarter, triple the profits from the prior year.

The first quarter of 2020 featured two and half months of business as usual and two weeks when most revenue disappeared as the Covid-19 pandemic took hold. By mid-year, the casino business in Atlantic City returned, if limited in scope and remained limited through the first quarter of this year.

But the city’s casino industry posted gross operating profits of $95 million in the first quarter, more than three times higher than the same period last year. Figures from the New Jersey Division of Gaming Enforcement indicated eight of AC’s nine casinos showed an increase; only Bally’s posted a loss, according to the Associated Press.

Gross operating profits include earnings before interest, taxes, depreciation and other charges.

James Plousis, chairman of the New Jersey Casino Control Commission, said this year’s figures are not evenly comparable to the first quarter of 2020 due to the virus-related shutdowns. In comparison to the first quarter of 2019, this year produced 11 percent more gross operating profit.

“The strength of internet gaming and the safe return of tourists to Atlantic City are a powerful combination,” Plousis said. “Last month’s lifting of casino capacity restrictions bolsters confidence for a strong recovery this summer.”

Borgata posted $29 million during the quarter, up some 28 percent; Tropicana reported $16.2 million, an increase of 128 percent from last year; Harrah’s earned $9.5 million, a gain of 224 percent; Hard Rock posted $8.5 million, compared to a $4.2 million a year ago; Caesars reported almost $8.2 million, after a loss of $593,000 in the first quarter of last year; Ocean Casino Resort earned $7.94 million, compared to a $574,000 loss in 2020; Golden Nugget produced $4.7 million, which jumped 406 percent; Resorts earned just over $1 million, compared to a $3.4 million loss in 2020; and Bally’s reported a loss of nearly $6.5 million, compared to a loss of over $8 million last year.

The results follow the same pattern as U.S. statistics in the casino industry.

According to the American Gaming Association, commercial casinos in the country took in more than $11.1 billion in the first quarter of this year, which equaled the best quarter, the third quarter of 2019.

Occupancy rate in the first quarter exceeded 50 percent, with an average room rate of $131 a night. Ocean produced the highest average room rate at $175, while Resorts had the lowest-priced at $91.

These results are a “further sign that the industry is recovering,” said Jane Bokunewicz, coordinator of the Lloyd D. Levenson Institute of Gaming, Hospitality and Tourism at Stockton University. “As the last restrictions are lifted, there is every reason to expect to see even stronger recovery in the second- and third-quarter data.”

In related news, among the factors that attracted gaming companies to Atlantic City is one of the lowest tax rates in the nation—8 percent on GGR, and 15 percent on iGaming operations. For brick-and-mortar sports betting at New Jersey’s casinos and at the racetracks, the tax is 8.5 percent, while the tax on online sports betting is 13 percent.

Those rates are not about to change, though they mean fewer revenues for the operators.

“The tax rate should have been higher in the first place,” said Assemblyman Ralph Caputo, a former casino executive who is the chairman of the Tourism, Gaming and the Arts Committee. “I agree that we should have taken advantage then, but it wasn’t politically possible. Nobody wanted to upset the apple cart.”

For former New Jersey Senator Ray Lesniak, the goal of sports betting wasn’t to rake in money. “It was to save the casinos and the racetracks from bankruptcy and it worked. It’s a booming business. We’re maintaining open space [through preservation of horse farms] and we’re keeping a lot of jobs.”

State Senator Paul Sarlo, whose district includes the Meadowlands Sports Complex, agrees. “It doesn’t work to overtax casinos,” said Sarlo, the chairman of the powerful Senate Budget Committee.