Struggling Stakes in Atlantic City
The 2024 Gambling Fiasco
Preparing for the Future: Anticipated Developments and Upcoming Changes
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Warning Bells
Atlantic City's gambling oasis took a financial hit in the third quarter of 2024, reporting a $236.5 million collective operating profit - a 13.8% plunge compared to the same period in 2023 [1]. This sobering figure sheds light on the precarious state of the city's gambling industry, faced with economic hardships, fluctuating consumer trends, and a pinch of absent major events pulling at the purse strings [2][3].
Jane Bokunewicz, director of the Lloyd Levenson Institute at Stockton University, summed up the issues, "The high costs of operations, coupled with the absence of significant tourism events like the annual air show and beach concerts, thinned the wallet this summer" [1]. She also highlighted a 17-dollar drop in the average hotel room rates, an indication of dwindling consumer demand [1].
This slump in profits follows a downturn across the first nine months of the year, with a 9.2% decline in collective operating profits [1].
The Online Gambling Tsunami
While the lucrative rise of online gambling complicates the picture, it's not all doom and gloom [2]. The online sector presents new revenue streams, but it comes at a cost. Sharing profits with tech partners and other stakeholders chimes away at the casinos' take [2].
Even the internet-only gaming entities have faced a profit setback, with Caesars Interactive NJ and Resorts Digital reporting losses of 7.8% and 4.8%, respectively [1].
Atlantic City's land-based casinos have grappled with maintaining non-gaming revenues, traditionally a summer cash cow [2]. The total revenue from hotel stays, chomping on a burger, or laughs at a comedy show amounted to $511.6 million - a 5% drop compared to the previous year [1]. The hotel sector displayed a mixed bag, with Ocean Casino Resort commanding the highest average nightly rate of $335.63, while Golden Nugget offered the least at $124.70 [1]. Hard Rock boasted the highest occupancy at 95.1%, in stark contrast to Golden Nugget's 66.4% [1].
James Plousis, chair of the New Jersey Casino Control Commission, warned that escalating costs have played a significant role in the profits' freefall [2]. Moreover, the pandemic's aftermath has altered the gambling landscape in ways not seen before [2]. While online gambling offers growth opportunities, it also diminishes the luster of land-based operations.
The continuing high costs have resulted in lower profits compared to the same period last year [2].
Peering into the Future
The profit declines are a stark reminder of the tightrope Atlantic City casinos walk, balancing traditional revenue streams with the realities of the digital-dominated gambling world [2]. With stiff competition brewing from neighboring states and the online sector, Atlantic City's gambling industry may need to innovate and adapt to lure customers and meet evolving preferences [2].
Caesars and Hard Rock have managed to buck the trend thus far, but the overall picture remains murky [1]. As the final bells of 2024 toll, the spotlight is on Atlantic City's adaptability in weathering these financial storms and carving a niche in a cutthroat market [2].
Enrichment Data:
- Bally’s and Resorts Casino Hotel experienced significant declines in profits [1][2].
- Increased Expenses: The high costs of operations contributed significantly to the decline in profits [2][3].
- Economic Challenges: Broader economic conditions in 2024 posed challenges for the casino industry, despite record gross gaming revenue [3][5].
- Sluggish Consumer Demand: Weakened consumer demand played a critical role in reducing profits [2][3].
- Stagnant Net Revenue Growth: The net revenue decline of 0.5% from 2023, despite overall gaming revenue records, indicated inefficiencies in converting revenue to profits [3][5].
- Jane Bokunewicz, director of the Lloyd Levenson Institute, discusses the pressures on Atlantic City's casinos, including the high costs of operations and the absence of major events, contributing to a $236.5 million collective operating profit decline in 2024.
- The rise of online gambling in New Jersey provides new revenue streams but also brings pressure from tech partners and stakeholders, as companies like Caesars Interactive NJ and Resorts Digital reported losses in 2024.
- In 2024, the New Jersey gambling industry faced economic hardships, fluctuating consumer trends, and the costs associated with online gambling, as hotels like Golden Nugget offered the least average nightly rate at $124.70 and struggled with a 66.4% occupancy rate.
- James Plousis, chair of the New Jersey Casino Control Commission, warns of the impact escalating costs have had on profits in 2024, knowing that the future requires adaptation to meet evolving preferences and compete with neighboring states in the digital-dominated gambling market.
