Atlantic City casinos beat the odds by posting a profit margin rise in their third-quarter operations. The reports have definitely defied expectations and marked the best market results in years.
The New Jersey Division of Gaming Enforcement (DGE) released the figures on Friday. Combined, the nine casinos generated net revenue of $929 million in a three month period and is a 2.7% boost compared to last year’s third-quarter results.
The operating profits have gone up by 12.5% and mark the first profit gain recorded since Ocean Casino Resort and Hard Rock Atlantic City had started operations. The operating profits figure is at $239.4 million.
Although there is a significant rise in the profit margin, the year-to-date operating profit is still low. At 4.5% which translates to $484.6 million, the profit gain from last year is considered low owing to the fact that the first and second quarters had faced a profit decline. The first quarter’s 30% decline was even more pronounced and weighed down on the results as well.
The Q3 profit rise was attributed to the new casinos which were unable to register such results last year because of the opening costs.
This third quarter, however, Ocean Casino Resort recorded a profit of $10.2 million while Hard Rock had a $24.4 million profit.
Similarly, online gambling and sports betting played a major role in increasing the profit figures. For instance, Caesars Interactive which is an online-only operator registered a revenue jump of 167% and recorded $3.1 million in profits.
However, this was not true for all online operators with the likes of Resorts Digital reporting a 16.3% profit decline. The decline was valued at $1.7 million.
Caesars Entertainment’s brick and mortar casinos had conflicting results as they registered profit falls. The biggest profit decline percentage was posted by Bally’s 22.6% profit decline. Caesars AC followed closely at a decline of 18.4% and Harrah’s 8.2% placed it in third place.
As for the profit gains, Borgata which is leading the market posted the biggest profit of $69.85 million (which is a 10.6% increase).
The Tropicana recorded $32.4 million in profits, a 2% increase while the Golden Nugget gained $17.75 million, a 30% increase. Resorts Casino Hotel also registered a 17% profit gain which translated to $9.3 million.
According to a CalvinAyre.com article, apart from casino operations, AC casinos’ hotel occupancy rate was boosted. The 90.8% occupancy rate recorded is a 2.6% increase compared to last year’s third quarter. Moreover, third-party business sales also shot up by 4.9%.
With the rampant growth of online betting operations, the profit margins for Atlantic City casinos may continue to rise. However, it would require the year-end results to back this up as there could be a decline as well. The Q4 results will shed a light if Atlantic City gambling market can support all the nine casinos or not.
If not, it will prove the fears that some AC operators have concerning the saturation of the gambling market.