Atlantic City Casino Industry Continues To Rebound; Is Sports Betting Playing A Role?

Atlantic City revenue is reaching heights that it hasn't seen in years, but sports betting is only a small part of that equation.
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It’s no secret that online gambling and sports betting (81% over the internet) in New Jersey are thriving, but what about the brick-and-mortar casino floors in Atlantic City?

According to figures made public by the New Jersey Division of Gaming Enforcement on Tuesday, April winnings from slot machines and table games inside the casinos was $207.58 mm, up 8.4% compared to April 2018.

New Jersey launched sports betting in June of last year, and opened two new casinos, Hard Rock and Ocean Resort Casino (now Ocean Casino Resort), that month as well.

Through April, “casino win,” as the DGE calls it, was $804.71 mm, up 12.3% over the first third of 2018.

  • Slot win: $573.15 mm (+12.9%)
  • Table game win: $231.55 mm (+10.6%)

Slot & table game winnings in 2018

NJ launched online casino gambling in late 2013, and remarkably, the industry is still regularly aspiring to new heights. Through the first four months of 2019, internet gambling revenue (not including sports), was $141.06 mm, up 52.4% year-over-year.

Part of these gains are represented by the same organic growth the industry has experienced year in and year out from its inception, with the rest a combination of online sports betting crossover traffic, and a smattering of new online casinos popping up (most notably Hard Rock online casino and an effort from DraftKings) over the past year.

In 2018, real-life slots and table games were also on the rise, rebounding with a relatively strong year.

Slot winnings last year were $1.8 billion, the best year since since the $1.87 billion recorded in 2014, according to Garden State data compiled by the University of Nevada Las Vegas’ Center for Gaming Research. Table game revenue of $709.85 mm was the best year since $798.24 mm in 2013. Last year’s table game revenue narrowly beat the revenue in 2014 ($708.21 mm).

Effectively, Atlantic City in 2018 returned to its 2014 form. It is worth noting that for most of 2014 there were 11 casinos in Atlantic City. There are nine currently.

Projection for 2019?

If the slot machines on the casino floors maintain their current pace for the remainder of the year, 2019 revenue from the machines will be more than $2 billion.

That would bring the slots back to 2013 levels.

If the table games maintain their current pace, revenue should be around $785 mm, which would be close to the 2013’s total ($798.24 mm).

This might sound like a modest accomplishment, as 2013/14 began a string of brick-and-mortar casino closings in the seaside gambling town, and 2018 saw the opening of two new casinos, which often boosted revenue at the expense of existing casinos, but it’s something.

AC slot revenue fell year-over-year from 2007 to 2016, while table game winnings were on the decline from 2008 to 2015. Right now, they are on a legitimate upswing.

Individual casino outlook a mixed bag

In the context of the long periods of decline for slots and table games respectively, the casino floors are recovering. But on an individual casino level, growth is more a mixed bag. New casino Ocean Casino Resort is already flirting with disaster. And as a whole, Atlantic City is hardly thriving. The aforementioned growth rates for slots and table games through April of this year are very solid, but there’s still a ways to go before calling it a comeback.

The all-time high for slot win was $3.8 billion in 2006; the record for table games was $1.45 billion in 2007.

The landscape for gambling in NJ has dramatically changed over the past 10+ years. Slot and table games are going to experience a  bump in 2019, but growth will likely be more modest and incremental going forward. There’s no path for the Atlantic City gaming floors to return to their pre-Great Recession Days.

Those days are history. But coupled with sports betting and iGaming revenue, there’s at least a path to significantly bridge the gap.

And that’s OK for NJ and for Atlantic City. Total gaming revenue in NJ, which now includes the aforementioned online betting and sports wagering, is on pace to reach roughly 2010/11 levels, wiping out years of declines.

In 2018, NJ gaming revenue was $2.9 billion and up 9.1%, the best year for the industry since revenue grew 9.5% in 1995. It’s worth noting that the 2018 figure includes sports wagering revenue at the tracks, which don’t have casino floors like the AC casinos. And no analysis of Atlantic City is complete without noting that the horsemen are outperforming Atlantic City casinos where sports betting is concerned, particularly the Meadowlands.

So what role does sports betting have?

The AC casino floors were holding steady and beginning to show signs of turning things around before sports betting kicked off in NJ. Online gambling played its role, by getting a new demographic interested in exploring live casino gambling.

Sports betting too, is having an impact. It’s just not on Atlantic City land-based revenue. Direct revenue from books on the boardwalk has been mediocre at best, and there’s no clear indication that sports betting is promoting tons of slot and table game play, as existing casino revenue fell at every casino except the Borgata (+0.5%) in April. Instead, it’s the two new casino ($38.55 mm combined) that are driving b&m growth.

With regards to the totality of NJ gaming revenue, that’s a different story. Online sports betting is not only accounting for over 80% of handle, but it’s proven a clear driver to online casinos. The land-based sports betting revenue at the tracks accounts for the lion’s share of retail revenue. And online plus retail sports betting revenue at the Meadowlands grabbed a whopping 57.1% market share in April.

Still, even with 81% of the sports betting handle now happening online, and much land-based sports betting traffic landing at the tracks, it looks like the vertical has at least brought some people into the casinos. States considering legalizing sports wagering should take note of this, and also realize that online/mobile isn’t cannibalizing b&m win.

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