Well, at least it wasn’t a losing month for Atlantic City.
The boardwalk city posted a scant win in April, with land-based revenue up 0.3% to $191.4 million. Factor in online gambling and that figure climbs to $214.4 million, representing a 0.9% uptick over last year.
It was the first month of 2018 that AC booked a win. Revenue for the year is still down 6.1% for land-based casinos, and 4.4% overall.
Ups and down for land-based casinos
It was a volatile month for individual casinos, with several posting either double digit gains or losses.
Near the front of the line was Golden Nugget, which saw its revenue climb by 11.6% to $20.2 million. Golden Nugget remains the only Atlantic City casino to see its land-based gaming grow in 2018, up 5.3% for the year. Resorts also had a stellar month, with revenue surging 23.3% to $17.2 million. It was by far Resorts best month of the young calendar year.
On the flip side was industry leading Borgata, which suffered a 9.1% loss yet still posted monthly revenue of $53.1 million. Bally’s fared even worse, as revenue dipped 11.3% to $15.2 million.
Both Caesars properties enjoyed modest gains, with Caesars putting the brakes on a pronounced downswing (+4%) and Harrah’s revenue climbing an impressive 7.8%. Revenue for Caesars is still down a worrisome 16.6% for the year.
Third place Tropicana suffered a smallish loss. Revenue was down 2.6% to $27.6 million.
In total, Atlantic City’s land-based casinos have tallied $716.7 million in 2018, down 6.1%. Toss in iGaming and that figure swells to $786.3 million.
Online does what it does best…wins
It would be a bit much to say that iGaming is saving Atlantic City, but it’s certainly not hurting its cause either. The state’s online gambling industry only had its second best month in April, posting revenue of $23 million.
Of note, year-over-year revenue was up just 10.6%, the smallest percentage gain in industry history. Under normal circumstances this would suggest that the industry is gravitating toward maturity, but the expected opening of two AC branded online casinos (one from Hard Rock Casino, the other from Ocean Resort Casino), combined with liquidity sharing on WSOP and 888 Poker branded online poker sites in NJ, NV, and DE, virtually guarantees a strong summer and fall showing.
Beyond that, it’s anyone’s guess how long before online gambling revenue flattens out.
Second half of 2018 offers high hopes
There are two new avenues by which Atlantic City could see revenue surge, and fast: new properties and sports betting. But both come with question marks.
On or around June 28, Atlantic City will see the opening of not one but two new properties, marking the first time a new casino has entered the space since 2011. It also represents a paradigm shift for Atlantic City, which spent the past several years shrinking its casino industry from 12 properties to seven, all in an attempt to right size the market.
That strategy largely worked, as casino revenue has mostly stabilized in the past couple of years. To account for the lost casinos, existing properties have had to pick up the slack. And that they did, especially the recently renovated Tropicana and the resurgent Golden Nugget.
So is bringing in two new casinos, especially now that Atlantic City is still proving somewhat vulnerable, the right move? We’d argue yes, but only if those casinos bring something fresh to the marketplace.
Hard Rock Casino has embraced this ideal, evidenced by its booking of dozens of musical acts. Ocean Resort Casino too will attempt to cater to the non-gambler, but not so much that it will ostracize the prototypical player, much like its predecessor the Revel did.
Still, it’s without question that not all of the new casino revenue will be additive to the market. In a statement to the Morning Call, Ocean developer Bruce Deifik firmly acknowledges this:
“There’s no doubt that Hard Rock and our project will take some business from other houses. That’s just the way the world works. But I believe that over two years, three years, collectively we can raise the level. A rising tide lifts all ships.”
If tourism increases due to the influx of new non-gambling activities then the entire market will benefit. However, if the properties are just viewed as “another casino,” it could result in 2014 all over again, when market saturation spread revenue so thin that multiple properties were forced to shutter their doors.
Less questionable is the impact the proliferation of sports betting will have on the market (Hint: it will be positive).
On its own, land-based sports betting is not a tremendous money maker. In a free report published in January 2018, Gambling Compliance sees New Jersey generating just ~$50 million from sports bets taken at casinos and horse tracks. For perspective, that’s less than 2% of what Atlantic City generated from gaming in 2017.
But that figure doesn’t tell the entire story. Sports betting may very well be a driver of casino traffic. Put simply, players will come down to watch and bet on the game, but stick around to play some blackjack or take in a show. Just think about what happens in Las Vegas during the Super Bowl or the NCAA Championship and apply that, albeit on a smaller scale, to Atlantic City.
We say smaller scale because New Jersey is not nearly the tourist attraction Vegas is. Not only that, but there will exist other places to bet on sports, namely Monmouth Park and possibly the Meadowlands, both of which are significantly closer to New Jersey’s population centers than Atlantic City. Their presence could take a healthy bite out of AC’s sports betting apple.
Then there’s online sports betting, and this one is a bit of a double edged sword. On one hand, New Jersey is expected to generate roughly $250 million per year from online sports wagers, and most of that revenue will be tied to Atlantic City branded (or possibly affiliated) sites. That would bring the online component of Atlantic City revenue well above $500 million annually, enough to provide a significant cushion.
On the flip side, the presence of online sports betting may dissuade visitation to the boardwalk city, especially for those who have little interest in anything beyond wagering on games. After all, online sports books typically offer more and better wagering options. Factor in that they can be made from the comfort of one’s home or on the go via a mobile device, and it’s difficult to see punters going out of their way to place bets in Atlantic City.
There’s still way more upside than downside to legalized sports betting in New Jersey for Atlantic City, it just might not be the boon for land-based casinos some suspect it will be.