Posted on: November 23, 2022, 10:38h.
Last updated on: November 23, 2022, 04:10h.
Atlantic City casino gross operating profits for the nine resorts collectively totaled $269.2 million during the third quarter of 2022.
The numbers from the New Jersey Division of Gaming Enforcement (DGE) present mixed results. While the $269.2 million profit experienced in the third quarter of 2022 represents a 13% year-over-year quarterly loss, the number is 12.5% ahead of what the same nine casinos reported in profits during July, August, and September in 2019.
As to why profits slowed during Q3 2022 from Q3 2021, Jane Bokunewicz, director of Stockton University’s Lloyd D. Levenson Institute of Gaming, Hospitality and Tourism, had an explanation.
Summer 2022 faced many headwinds, from shortages in staffing and supplies to increased gas prices and inflation,” Bokunewicz reasoned. “Coupled with reduced overall spending and other expenses, increased wages contributed to a very challenging summer for Atlantic City’s casino operators.”
Hard Rock led the way in profits, as the casino owned by the Seminole Tribe of Florida netted over $44 million. Tropicana was next at $41.5 million, and Borgata third at $40 million.
Gross operating profits reflect earnings before interest, taxes, depreciation, amortization, charges from affiliates, and other miscellaneous items as reflected on each casino licensee’s income statement. It is a widely-accepted measure of profitability in the Atlantic City gaming industry.
Revenue, Profits Climb From 2019
The difficulty in businesses combating record inflation was made apparent in the DGE Q3 profit report. While net revenue, which includes gaming revenue, room sales, food and beverage receipts, and entertainment income expanded by 1.3% to $980.1 million last quarter, the casinos’ gross profits contracted from last year.
But when compared with pre-pandemic 2019, business appears to be headed in the right direction.
Through nine months in 2022, casino net revenue was over $2.5 billion, with profits at more than $608.5 million. Through the same nine months in 2019, net revenue totaled $2.4 billion and profits came in at $484.5 million.
Gaming is largely responsible for the higher net revenue and profit, as the casino floors in the oceanside gaming town have experienced robust action in 2022.
Through 10 months in 2022, brick-and-mortar gross gaming revenue (GGR) in Atlantic City totaled $2.35 billion — about $101 million more than they won on their land-based floors during the same period in 2019.
Though profits are bettering as the casinos streamline their operations, the quarterly DGE filing provides more evidence that far fewer overnight visitors are venturing to Atlantic City than did before the pandemic.
During the third quarter, the 15,544 Atlantic City casino guestrooms were occupied at a rate of 86.7%. In Q3 2019, those same rooms were occupied nearly 91% of the time.
However, the casino rooms went for considerably higher rates at about $217 a night. In 2019, the average room rate was only $161 — a $56 difference.
Through nine months, Atlantic City casinos experienced an occupancy rate of 76.2%. Casinos sold 3,000,480 room nights during the three quarters. Through nine months in 2019, the casinos’ occupancy rate was 81.2%, with 3,299,056 rooms booked.
But again, the casinos are getting more money for each room. The average rate for an Atlantic City casino hotel room this year through September was $184.71. In 2019, the rate was $145.51.