AC Revenue Sees Slight Uptick, But Fate of Industry May Hinge On 2018 Decisions

Atlantic City land-based casino revenue has experienced its first year of growth in more than a decade, according to official numbers released Friday by the New Jersey Division of Gaming Enforcement (NJDGE).
New Jersey brick & mortar casino businesses generated $2.413B in 2017 revenue compared to $2.406B during the previous calendar year, which represents a slight annual uptick of 0.3% overall for slot machines and table games.
The news was released in conjunction with Garden State online wagering figures, which nearly reached $250M in 2017 — establishing an all-time yearly record for New Jersey’s regulated online gambling industry since its November 2013 inception.

2018 Atlantic City gambling forecast

The modestly positive news that Atlantic City casinos managed to improve upon Gross Gaming Revenue (GGR) figures in 2017 does not necessarily foretell a brighter future for New Jersey brick & mortar gambling interests in 2018.
Colorado developer Bruce Deifik has recently purchased the former Revel Casino property from Glenn Straub at a price of $200 million, and there is speculation that the establishment could reopen in a matter of months alongside the former Trump Taj Mahal property — which will be rebranded under the Hard Rock name. This could place added pressure on the somewhat stabilizing regional industry while stifling momentum gained by Borgata, which enjoyed a banner year as the city’s most successful casino in 2017.
The city itself may be justified in its celebratory optimism for 2018 thanks to the expectation of additional tax revenue and investment. However, it is no secret that Atlantic City’s plight is somewhat dependent on an upcoming U.S. Supreme Court decision that will determine the legality of sports betting nationwide. If the eventual SCOTUS ruling is favorable to the proliferation of sports betting in the Garden State, the city’s brick & mortar gambling business is likely to experience a significant increase in activity because it is already prepared and well-positioned for such an outcome.
The flip side is that an unfavorable SCOTUS decision would further expose Atlantic City’s vulnerability to out-of-state competition that has hampered its land-based industry over the past decade. This geographical susceptibility is outlined in the brief “Tale of Two Centuries” editorial section below.

Measuring the impact of NJ regulated online gambling on AC revenue

While both sides of the regulated online gambling argument spent 2017 touting their respective viewpoints on how iGaming affects land-based casinos, it appears NJ online gambling has had a positive, yet not overwhelmingly positive, impact on Atlantic City establishments so far.
The effectiveness of cross-promotional efforts is difficult to gauge considering how quickly the live and online gambling markets are changing. While cannibalization fears between the two platforms can be easily dismissed based on numerous studies, the online realm hasn’t exactly sparked a massive revenue uptick at AC’s boardwalk properties either.
That said, it’s difficult to ignore that since the proliferation of online gambling in NJ, Atlantic City land-based revenue has stabilized and begun to grow. And that’s not even factoring in the money generated directly from online, which at $246+ million was more than the Golden Nugget, Bally’s and Resorts land-based casinos took in.
Online gambling, is in effect, as lucrative as a mid-sized casino, and one that isn’t in direct competition with the physical properties located on the AC boardwalk and marina.
It’s likely operators will continue to foster the relationship between live and online, but not overemphasize it, as online is reaching maturity and there are more pressing concerns on the horizon.

Atlantic City: a tale of two centuries

When Resorts International Atlantic City opened its doors in 1978, it was the only legalized casino located in the eastern United States. The city’s boardwalk quickly expanded and acquired fame as a popular gambling destination soon thereafter — rising in lockstep with authoritative cable television sports programming provided by premium outlet Home Box Office(HBO).
Throughout the 1980s and 1990s, “America’s Playground” hosted unforgettable bouts featuring names such as “Iron” Mike Tyson, Arturo “Thunder” Gatti, and George Foreman. By the time the cult classic poker movie Rounders released in 1998, Atlantic City was firmly established as a viable alternative to Las Vegas gambling despite its absence of convenient regional access.
That lack of expressway deal-making — which enabled boutique New Jersey businesses to thrive during the city’s heyday — would come back to haunt Atlantic City once neighboring Pennsylvania passed legislation to allow casinos in the Keystone State. With modern casino gambling available in Philadelphia by the late 2000s, Atlantic City was no longer the most convenient destination for gamblers who resided in the New York City metropolitan area.
What’s more, tourists arriving through Newark or JFK Airports could just as easily make the 100-mile trek to the City of Brotherly Love which has the added benefits of infrastructure, major professional sports teams and of course, convenience.
Thus, the future of Atlantic City land-based casinos may hinge on upcoming decisions that will broadly influence New Jersey’s stature as a desirable gambling destination for locals and tourists alike.
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David Huber

David Huber (known online as "dhubermex") has been involved in the gambling industry for more than a decade. He currently collaborates with several iGaming interests as well as Upswing Poker in the role of writer, analyst and researcher.

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