The coronavirus pandemic upended the Atlantic City casino industry, yet Hard Rock Hotel & Casino and Ocean Casino Resort are thriving amidst the chaos.

Atlantic City’s two newest casinos (now approaching their respective third anniversaries) are staking out positions atop the market, trailing only the untouchable Borgata Hotel Casino & Spa.

And while competition is good, the success of Hard Rock and Ocean appears to be coming at the expense of the other seven Atlantic City casinos. As the two properties make their market ascension, brick-and-mortar gambling revenues across the city are not keeping pace.

Is there enough Atlantic City casino revenue for nine?

When Hard Rock and Ocean opened in June 2018, some industry experts and analysts wondered if Atlantic City could handle additional casinos.

Would the two Boardwalk properties help invigorate a recovering gambling market that had recently been cut in half by competition? Or would they simply draw customers away from existing casinos and exacerbate the market’s woes?

Well, even before COVID-19 shut down the entire city last March, the answer started to take shape. And, based on gambling revenue in the months following last year’s industry shutdown, the conclusion is now pretty clear.

Hard Rock and Ocean have steadily increased their market share of casino win (table game and slot machine revenue) since 2018 while the rest of Atlantic City casinos have all seen declines.

Atlantic City casino market similar to Boardwalk pizza

Think of the Atlantic City market like a pizza pie and each slice represents an Atlantic City casino. However, unlike a traditional Jersey Shore pie, the slices of the AC casino market are not equal; some eat better than others at this table.

In a healthy market, the total size of the pie should increase proportionately when new casino operators join the table.

Hard Rock and Ocean are both large casino hotels. And, considering the slow but steady upward trajectory of the industry prior to their openings, annual market growth between 8% and 12.5% is not unrealistic.

Again, not everyone will get equal slices and everyone already at the table sacrifices a sliver or two. But, the whole pie gets bigger to ensure everyone eats well enough to stay healthy.

Unfortunately, that has not really been the case in Atlantic City.

Before Hard Rock and Ocean, Atlantic City was…

Casino win in Atlantic City had been growing by an average of 3.2% annually between 2013 and 2017. That figure excludes the five properties that closed in that span.

In 2017, casino win reported by AC’s seven properties was $2.4 billion.
Take a look at this pie graph for a breakdown:

With Hard Rock and Ocean, AC became…

In 2018, casino win increased 4% to $2.51 billion, thanks to the dual openings of Hard Rock and Ocean halfway through the year.

NJ sports betting was also legalized in 2018, adding another reason for people to gamble in AC.

The following year, casino win reported by the nine properties was $2.69 billion, a year-over-year increase of 7%.

Hard Rock increased its market share from 6.4% to 12.1%, while Ocean went from 3.6% to 8%.

Here’s a pie graph of 2019 casino win:

Forget all that because COVID changed everything

But 2020 was a whole different story.

NJ Gov. Phil Murphy ordered AC casinos to close on March 16. The governor permitted the gambling parlors to reopen just before the Fourth of July. Borgata elected to stay closed until July 26.

Unsurprisingly, casino win dipped to $1.5 billion last year. But, Hard Rock and Ocean significantly increased their market share.

By year’s end, Hard Rock controlled just under 15% of the Atlantic City market. Ocean increased its piece of the gambling pie to 12%. Meanwhile, the other casinos gave up a percentage of market share.

Borgata, the market’s highest-performing casino, relinquished 4.1% from 2019 to 2020.

Below is the 2020 pie graph:

Atlantic City casino pie slices getting smaller for most

Since the AC casinos reopened last summer, the trend of Hard Rock and Ocean feasting on the slices of existing market share has continued.

Beginning in August 2020 (the first full month all nine casinos were reopened at reduced capacities) through April 2021, Hard Rock increased its market share to 16.8% and Ocean went up to 12.6%.

Borgata regained a small percentage, creeping back up to 23.1%.
Here is a breakdown of the casino win as a percentage of the AC market since August:

Reservations are strongly encouraged for a seat

Table game and slot machine revenue is the main course for Atlantic City casinos. Sure, online gambling and sports betting are beneficial, however, neither produces revenue that belongs entirely to AC casino operators.

AC casinos need people in their buildings and gambling on their casino floors.

Several of the casinos have announced capital improvement plans that include hotel room renovations, new dining outlets, as well as additional slots and table games.

Hard Rock has said it will spend a minimum of $20 million. Ocean, which recently added two new high-limit areas known as The Cove and The Loft, is reinvesting $15 million.

Remember, both of these properties received extensive makeovers prior to reopening in 2018.

At the same time, others like Caesars Entertainment, for example, are not sitting idle. The parent company of CaesarsHarrah’s Resort, and Tropicana unveiled details to its $400 million maser plan.

And these new additions are either open or getting ready to debut. However, will these upgrades be enough to earn a bigger slice of the pie?

Given all the industry endured in 2020 and at the start of 2021, the Atlantic City casino market is as healthy as can be expected. But, if the current trends continue well into a post-pandemic world, there may be fewer seats available at the Atlantic City table.

The big boys will eat. Who will go hungry?

AP Photo/Wayne Parry

About

David Danzis is an award-winning journalist who has covered business, politics, government, education, and sports in New Jersey. Most recently, he wrote about Atlantic City casinos, online gaming, and sports betting for The Press of Atlantic City. David is a graduate of Rutgers University.