Favorable Conditions Lead To Big Win For Borgata, Online Gambling In July

[toc]A friendly calendar and record-setting performances from both the Borgata and online gambling helped propel Atlantic City revenue to its highest point in nearly two years.

Borgata, one of the sole shining stars in a casino landscape plagued by turmoil, generated a jaw-dropping $84.8 million for the month July. Of this amount, $80.8 million was accounted for by land-based revenue, with online gambling revenue contributing approximately $4 million.

It was the casino’s single biggest monthly take in its impressive 13-year run.

Almost predictably, NJ online gambling also set a revenue record in July, thus marking the eighth month in nine tries that it has set new a benchmark. The industry’s 17 casino and poker sites generated a total of $17.37 million in gross gaming revenue.

And while these figures, as well as Atlantic City’s total July revenue of $275.3 million, were undoubtedly inflated by the presence of a rare fifth weekend, it’s starting to look more and more like the struggling city is slowly turning the corner.

Winners and losers

Besides the Borgata (13 percent year-on-year growth), a handful of other land-based casinos made the grade in July.

In terms of raw percentage gain, Tropicana was the biggest land-based winner, with year-on-year-revenue climbing 14 percent.

Land-based properties Caesars, the Golden Nugget and Resorts all experienced single-digit percentage gains varying between 6 and 8 percent. Golden Nugget also made significant headway on the online casino front, setting a new monthly record for an individual license holder with $3,791,138.

On the flip side, Harrah’s and Bally’s both experienced a 5 percent year-on-year decline, while Trump Taj Mahal revenue fell by 8 percent.

The latter is readying to shutter its doors after Labor Day. Billionaire investor and Taj owner Carl Icahn pulled the plug in early August — approximately one month after casino workers from the Local 54 of the Unite-HERE union went on strike.

YTD revenue paint the real picture

Admittedly, it’s easy to write off Atlantic City’s 6.9 percent YoY uptick as a fluke; a byproduct of favorable shore weather and the inclusion of a fifth weekend. However, there’s little denying the progress AC had made overall this year.

Year-to-date land-based revenue is up 1.5 percent for the first seven months of 2016. Factor in online gambling, and that figure climbs to 3.26 percent.

While these figures may seem less than impressive, consider that Atlantic City had seen its revenue effectively slashed by half from its 2006 to 2015. Given this, any sign of growth or even stabilization should be viewed as a big positive.

Trump Taj shuttering not necessarily a negative

The consolidation of the Atlantic City casino market is nothing new. In 2014, four casinos (Atlantic Club, Trump Plaza, Showboat, Revel) shuttered their doors, reducing the total number of gambling properties from 12 to eight.

Interestingly, the impact has not been as negative as some may have feared.

To illustrate: For the first seven months of 2014 (before three of the four now defunct casino closed shop), AC generated $1.623 billion in gross gaming revenue. For the same time frame in 2016, operators took in $1.522 billion, representing a smallish 6.25 percent falloff.

At the time of their closure, the now shuttered casinos accounted for 13.1 percent of AC, meaning that the city has recouped more than half of the raw revenue that was lost.

Golden Nugget and Resorts, two casinos that have taken an exceedingly aggressive position in recent years, benefited the most, with revenue rising 23 percent and 25 percent, respectively, from two years ago to now. Borgata (+15 percent) and Tropicana (+7.5 percent) too, have reaped significant gains since the closures.

Given historical trends, it seems likely that the closure of Trump Taj will further bolster the remaining casinos, which may prove critical if NJ residents pass a referendum this November that will permit the construction of land-based casinos in the northern end of the state.

Online gambling a bigger asset than ever before

Of course, the market wouldn’t nearly be in as good as shape if it weren’t for online gambling.

In July 2014, revenue from online gambling sites comprised just 3.8 percent of total AC revenue. That figure has since swelled to 6.7 percent.

For perspective, online gambling took in just a few hundred thousand dollars less in July than both Trump Taj and Resorts. Should the industry grow by another 15 percent, it’ll threaten to generate more monthly revenue than Bally’s and the Golden Nugget.

The startling growth of online gambling is also the primary reason why AC generated more revenue in July 2016 than two years prior. Back then, land-based casinos generated $264.2 million. Last month, they only took in $257.9 million, but online gambling grew by more than enough to cover the gap.

Given recent trends, it’s not out of the question that online gambling will account for an even more significant portion of AC revenue in the fall months.

About the Author

Robert DellaFave

Robert DellaFave is involved in the legal New Jersey online gambling industry in a number of ways. Not only does he contribute to a variety of online gambling publications focused on regulated US online poker and online casino sites, he is also a game designer.