Atlantic City Casino Industry Is Slowly Recovering in 3Q20 But Is Still Not at Its Full Capacity

Article by : Helen Dec 10, 2020

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The third quarter of 2020 wasn’t exactly a return to normal for the casino industry in Atlantic City. While casinos and the adjacent hotels were allowed to start operating again in July 2020, they were capped at 25% occupancy. A number of other typical coronavirus-related restrictions were put in place as well, such as cleaning and disinfecting social distancing, and mask-wearing requirements.

According to a recent report of the New Jersey Division of Gaming Enforcement, all Atlantic City casinos reported a drop in the net revenue in 3Q20 – from a 64.9% year-on-year decrease for Borgata to 2.9% for Ocean Resort. Most casinos, however, experienced a decrease in net revenue between 40% and 20%. As for the gross operating profit, only one casino actually reported a year-on-year profit in 3Q20 – Ocean Resort (138.8%). The other eight casinos reported losses, with Borgata, once again, being the hardest hit one – its year-on-year losses amounted to -96.6% in the third quarter of 2020. Harrah’s and Tropicana also suffered significant losses – -43.8% and -41.5%, respectively.

The Atlantic City casino industry overall reported a -32.3% drop in net revenue in this period of time, compared to 2019 – from $929 million to $629 million. While it can hardly be called good, it is still better than the year-on-year comparison for 2Q20. Back then, the industry’s net revenue plummeted by 84.8%, and the gross operating profit was down by a whole 170.4% compared to 2Q19. So, we can see the industry recovering, slowly but surely, and with different rates of success casino-wise. While Ocean Resort managed to pull in significant profit and seems to have a promising future ahead, Borgata, Harrah’s, and Tropicana are still going through a rough patch, without any clear signs whether they’ll be able to pull through and fully recover.

The year 2020 (in comparison with 2019 figures) looks good only for Ocean Resort so far. In the year’s first nine months, the casino pulled in 574.4% more in gross operating profit than in the same period of 2019. (Back then, it reported a loss of $2.53 million.)

Borgata, Resorts Casino, Bally’s AC, and Hard Rock are all in the red, with losses of $15.24 million, $8.32 million, $3.76 million, and $1.57 million in the first nine months of 2020, respectively. The Atlantic City casino industry overall experienced a -44.4% drop in net revenues so far, in the first nine months of the year – from $2.42 billion in 2019 to $1.34 billion in 2020. The year-on-year comparison for the gross operating profit/loss looks even direr: it’s a -85.9% decrease. The released report also shed some light on the occupancy rates of the casino hotels. Borgata and Golden Nugget definitely struggled to keep their hotels full in the third quarter of 2020 – only 44.2% and 40.2% of the rooms welcomed guests, respectively. Ocean Resort and Caesars could boast the high occupancy rates – above 90% – while the average for the industry amounted to 72.9% in 3Q20.

The financial losses induced by COVID-19-related measures have already prompted the casinos to lay off or furlough their employees. In October, the industry was employing 17% fewer people than the same month last year.

It remains yet to be seen whether the Atlantic City casino industry will manage to close the last quarter of 2020 with minimum losses possible. With New Jersey experiencing a surge in daily new cases (with a record of 4,679 new cases on November 21), like most US states these days, the possibility of harsher restrictions imposed on the hospitality industry is still looming over the state’s casinos.