It’s a tumultuous time for Atlantic City, and with its casino industry on the decline in recent years, many people have put forth plans that would help the resilient seaside resort town reinvent itself. But is reinvention really needed? Or does Atlantic City simply need a little bit of tweaking?
Some look upon the 2014 closure of four Atlantic City casinos – Atlantic Club, Revel, Showboat, and Trump Plaza – as a low point for the New Jersey casino industry. But others fear it could get even worse before it gets better, as they see even more contraction in the city’s future.
It seemed like more contraction was a certainty back in late 2014, as Trump Taj Mahal was going through its own bankruptcy restructuring, threatening to shake Atlantic City to its very core. Along with thousands of lost jobs, and a loss of 70 percent of its tax base, with 25 percent of the city’s casino operators out of business, 2014 and 2015 saw the continued decline of gross gaming revenue in the Atlantic City casino market – a decline that dates back to 2007.
To highlight just how far Atlantic City has fallen, in 2006 the Atlantic City casino industry generated over $5.2 billion in GGR, that number dipped to under $2.6 billion in 2015, more than a 50 percent decline.
But is more shrinkage needed? Maybe not. Things are not all bad for the remaining Atlantic City casinos, as the most recent revenue reports released by the New Jersey Division of Gaming Enforcement attest.
With fewer competitors, the eight remaining casinos have by and large seen their GGR increase, and the three casinos that saw revenue dip are all working through bankruptcies.
|Casino||2015 Revenue||2014 Revenue||% change|
|Bally’s||$299 million||$314 million||(4.6%)|
|Borgata||$1.036 Billion||$970 million||6.8%|
|Caesars||$423 million||$443 million||(4.3%)|
|Golden Nugget||$279 million||$246 million||13.7%|
|Harrah’s||$569 million||$550 million||3.3%|
|Resorts||$207 million||$184 million||12.1%|
|Tropicana||$406 million||$388 million||4.5%|
|Trump Taj Mahal||$245 million||$299 million||(17.9%)|
Furthermore, in 2015 all eight casinos (even the struggling Trump Taj Mahal) posted operating profits, with seven of the eight casinos posting year-over-year gains on this front. This is a very good sign for their future viability.
|Casino||2015 Operating Profit||2014 Operating Profit||% change|
|Bally’s||$40 million||$23 million||76.6%|
|Borgata||$216 million||$158 million||36.3%|
|Caesars||$83 million||$60 million||39.4%|
|Golden Nugget||$23 million||$4.5 million||396.3%|
|Harrah’s||$123 million||$97 million||26%|
|Resorts||$16 million||$2.5 million||525%|
|Tropicana||$46 million||$60 million||(22.4%)|
|Trump Taj Mahal||$3 million||($1 million)||N/A|
The eight remaining casinos generated a total of $547 million in profits, a 40 percent increase over the $390 million the same eight casinos generated in 2014.
What’s next for Atlantic City?
It’s unclear if, or for how long, the growth trends of the past two years will continue for the remaining casinos.
With Atlantic City on the brink of bankruptcy, something needs to be done, and there are no shortage of proposals to help the municipality. Many of these proposals involve gambling expansion and/or reforms.
Proposals and potential projects include:
- Expanding casino gambling beyond Atlantic City.
- Licensing boutique casinos in Atlantic City proper.
- The reopening of Revel Casino.
All of these measures would have some type of impact on the current operators.
Adding casino gaming in North Jersey (something New Jersey residents will vote on this November) is meant to bolster Atlantic City and the Atlantic City casino industry, as a significant percentage of the revenue generated by the new casinos is earmarked for AC. But this plan also has the potential to further erode the Atlantic City market, with some analysts seeing it as the coup de grace for half of the remaining eight casinos in the city.
Boutique casinos would certainly cannibalize the gaming revenue of current operators, drawing locals and tourists away from their larger – and more expensive to run – cousins.
The reopening of Revel Casino, the newest and nicest (and most highly flawed) casino in the city, would also draw customers away from the current operators, and with its massive overhead, it’s unlikely Revel would be able to turn a profit. If it does manage to become profitable, it would do so by gobbling up a significant market share and likely lead to the end of the road for one or more other casinos.
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