Hard Rock Exec: AC Revenue Numbers Misleading

Online gaming made 2020 appear less disastrous for NJ casinos than those in most other states, but not all revenue dollars are created equal.
hard rock atlantic city boardwalk casinos

On the surface, it looks like a feel-good story.

According to figures announced on Thursday by the state Division of Gaming Enforcement, “Total Gaming Revenue for December was $312.9 million compared to $287.3 million in December 2019, reflecting [an]  8.9% increase.”

Imagine Atlantic City’s nine casinos being able to increase their revenue vs. the previous year despite the challenges of COVID in 2020. How did they pull that off?

Well, they didn’t, Hard Rock President Joe Lupo suggested in a WOND radio interview on Friday.

Not all dollars are created equal

The DGE reported a $46.2 million increase in NJ online casino gaming revenue last month vs. December 2019, while sports betting — more than 90% of which was of the mobile variety — was up $37 million.

That boost of some $80 million seemingly more than made up for a decline of $61.5 million in brick-and-mortar revenue.

But Lupo said, “We need more transparency on how third-party online companies are doing.

“There is so much help that we really need with these properties — we need to see the city revitalized, and it’s not going to happen when the media is reporting increases when they add in online revenue that is going to third-party companies that don’t have any stake in the game.

“They haven’t invested $500 million. … They haven’t invested the money that Ocean [Casino Resort] did, and they’re not investing the money that Caesars is doing with their merger.

“I don’t know why there isn’t more transparency in the reporting. This metric that we’re reporting all of the licensee revenues under the casinos isn’t giving the proper validity.

“And I think it’s hurting the perception. Land-based [revenue]  is down 35 to 40% in the past couple of months.”

Who’s to blame?

To be fair, it is the state Division of Gaming Enforcement that is directly lumping in casino-related revenue from online sources with the brick-and-mortar dollars being collected at the nine Boardwalk and Marina District properties. The “media” is, for the most part, simply following DGE’s lead.

Also, last week’s story about the December and total 2020 revenue at NJ Online Gambling noted: “In 2019, traditional casino gaming revenue represented 81.8% of total casino revenue, with 14.6% coming from online casino play and the other 3.6% from sports betting at casinos and their online betting partner apps.

“But last year, the brick-and-mortar ‘slice’ dwindled to 57%, with online casino jumping to 36.6% and sports betting claiming a 6.4% share.

“Casino executives point out that such a shift has not come without pain. Manpower needs are far less with online gambling, and it also brings business partners into play who get a portion of the proceeds in exchange for running the online casino and sports betting apps.

“And when the casinos need to cut thousands of  jobs, it depresses the economy of Atlantic County, which indirectly harms other businesses that see a decline in sales with that rise in unemployment. That means some would-be local visitors to casinos are forced to cut back on their visits, leading to additional decline in traditional casino revenue.”

The issue of online vs. brick-and-mortar revenue for Atlantic City casinos also was discussed on last week’s Gamble On podcast.

The real numbers

Lupo’s comments indicate that the undisclosed deals between casinos and online sports betting and casino operators such as DraftKings, FanDuel, BetMGM, 888, or PlaySugarhouse are more lucrative for those operators than previously had been believed.

Casino owners in states where partnerships with online gaming companies have not yet been finalized probably should take heed of Lupo’s words.

Meanwhile, let’s focus on brick-and-mortar figures specifically in 2020.

The revenue from slot machines and table games declined 43.7% last year, from $2.69 billion to $1.51 billion. Every casino reported declines on this metric, from 14.9% by Ocean to 52.4% by Borgata.

In December, Lupo’s Hard Rock casino led the brick-and-mortar charge with a modest 1.7% increase in such revenue. But even that distinction didn’t completely please Lupo.
“To see us be the only property that increased, when the others declined — obviously we’re stealing market share, but I’m not looking to do that,” Lupo said. “I wish we would rise with the tide.”

A second reporting debate

This is the second time this month that media reporting on casino financial reports has come up for discussion.

Last week, industry analyst Steve Ruddock got significant feedback when he noted the tendencies for headlines regarding monthly state regulator announcements to focus on sports betting “handle,” or amount wagered, rather than operator revenue or tax revenue.

The temptation is strongest regarding New Jersey, where a mind-boggling — and U.S. record — $996.3 million was wagered on sports in December (and that’s not even including horse racing).

Operator revenue was a less-sexy $66.4 million, with the state gaining a mere $8.5 million from sports betting in December — just under 1% of that fabled handle.


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