How bad are the second quarter revenue figures for the Atlantic City casinos?
The state Division of Gaming Enforcement, in its press release filed on Monday afternoon, declared, “In light of the casino closures, the Net Revenue and Gross Operating Profit (Loss) for the 2nd quarter and year-to-date are not comparable to the 2019 period.”
So, that bad.
Instead of its quarterly listing of gross operating profits, the period of April, May, and June — when all of the casinos were shuttered the entire time due to the COVID-19 crisis — the DGE had to report a gross operating loss for once, of $112 million.
DGE won’t compare that figure to Q2 2019, but we will: In that period, the casinos had gross operating profits of $159.3 million. (The latter figure was down slightly compared to Q2 2018, by the way.)
For the year, the casinos have lost $82.4 million, while in 2019 the first six months generated $245.1 million in profit to those casinos.
Hotel occupancy rates for the period were zero, of course, compared to 81.5% in Q2 2019.
Market leader Borgata, which at $55.4 million had just over one-third of the industry’s profits in Q2 2019, this time had the same proportion of the industry’s losses — $40.2 million.
Every casino lost money except Golden Nugget, whose remarkably strong online casino product enabled it to eke out a $3.1 million profit for the quarter. Still, that was down two-thirds from Q2 2019’s $10 million in Golden Nugget profits.
Tropicana’s “variance” of the two second-quarter numbers of minus 152% qualified as the second-least worst of the casinos. Ocean Casino’s industry-worst figure of 885% reflects a loss of $1.2 million in 2Q 2019 — the only AC casino to show a loss in that span — and then $11.8 million in this year’s second quarter.
All of 2020 is a bust for AC casinos
The first quarter 2020 numbers only included two weeks of March when the casinos were closed due to the pandemic.
But that period normally would have included the NCAA men’s basketball March Madness tournament, which is a large driver of both gambling on the games and also hotel stays by groups of fans who annually also spend plenty of additional money on casino game play, food and beverage, and shopping.
So in that first quarter, the casinos’ net revenues decreased 14.5% to $595.7 million compared to Q1 2019, while the gross operating profit of $29.6 million was a drop of 65.4% compared to the same period in 2019.
The hotel occupancy rate in first quarter 2020 also slipped by 4.5 percentage points to 68.1% occupancy.
Eight of the nine casinos reopened on July 4 weekend, with Borgata following three weeks later. So all of the casinos will have two months of operation and most will have nearly the entire third quarter with hotel guests.
But casino capacity is limited to 25%, and neither alcohol nor substantial food offerings are allowed inside the casino walls.
Still, industry observers have estimated that the casinos will recoup more than 25% of Q3 2019 figures, because the “high rollers” who stay in luxury suites can have high-end food and drink brought to the room. Those same players have plenty of disposable income, and a pent-up demand to play after 3 1/2 months away from their familiar haunts.