The coronavirus pandemic and ensuing business restrictions decimated Atlantic City casinos in 2020.
The end-of-year financial filings released Friday by the New Jersey Division of Gaming Enforcement show the damage’s full extent. Gross operating profits declined 80.2% and net revenues dipped 40.2% compared to 2019.
Overall, Atlantic City casinos reported just over $1.86 billion in net revenues in 2020. The industry reported slightly more than $117.5 million in gross operating profits, a widely accepted measure of profitability for Atlantic City casinos.
“The Q4 2020 report from the DGE marks the end of one of the most challenging years in the history of casino gaming in Atlantic City,” said Jane Bokunewicz, coordinator of the Lloyd D. Levenson Institute of Gaming, Hospitality and Tourism (LIGHT) at Stockton University. “A year that began with so much hope and the expectation of record-high revenues ended instead with record lows.”
Atlantic City casinos ‘endured’ 2020
The decline in casino profits and revenue should not surprise anyone. After all, the nine Atlantic City casinos were shut down for 107 days by the order of the governor. Even after reopening, AC’s gambling parlors were hamstrung by capacity constraints, food and beverage restrictions, and business limitations.
James Plousis, chairman of the Casino Control Commission, said “Atlantic City and its casinos endured their most challenging year in history.” Plousis went on to add, “Clearly, earnings were hindered by travel restrictions, limited amenities, and canceled entertainment.”
Looking beyond the industry’s collective performance, here are five noteworthy takeaways from the DGE report.
1) Online gaming and sports betting bailed out Atlantic City casinos
As a result of Atlantic City casinos being closed, annual NJ online gambling revenue increased 101% over 2019.
But, the three casino license holders who are solely iGaming and sports betting operators reported eye-popping GOP and net revenue spikes.
Resorts Digital saw gross operating profit jump from $8.5 million in 2019 to more than $21 million last year, an increase of 148%. DraftKings, Resorts, Mohegan Sun, and PokerStarsNJ are brands operating under the iGaming permit.
Caesars Interactive Entertainment NJ reported nearly $20 million in operating profit last year, a 45% increase over 2019. The Caesars Casino & Sports app, WynnBet, and World Series of Poker online report under CIENJ.
In 2020, Golden Nugget Atlantic City broke off its iGaming division from the brick-and-mortar casino. Golden Nugget Online Gaming, a publicly-traded company, reported $18.65 million in GOP and more than $65.6 million in net revenue.
2) Ocean went from worst to first
Perhaps the biggest surprise of 2020 was the performance of Ocean Casino Resort.
The Boardwalk casino reported a market-leading $21.87 million in gross operating profit last year. Of the nine Atlantic City casinos, Ocean was the only property to report a year-over-year increase in GOP.
NJ Div. of Gaming Enforcement released 2020 net revenue and operating profits for #AtlanticCity casinos today. COVID impact is severe. Gross operating profits -80.2%, net revenue -40.2% from 2019. Only one AC casino, Ocean, reported a YoY GOP increase in 2020.
— David Danzis (@AC_Danzis) April 9, 2021
The year-end results are even more impressive when compared to 2019 when Ocean reported a market-low of $6.7 million in GOP. For those trying to do the math in your head, that’s a 224% increase.
Ocean also posted the lowest year-over-year decline in net revenue of AC’s nine casinos. Ocean’s $194.8 million in net revenue was 23% less than 2019. But the other eight casinos posted declines of anywhere between 31% and 53.5%.
3) Borgata losing ground in AC?
The monthly gaming revenue reports from Atlantic City casinos are a glimpse into how the market’s top dog fared in 2020.
It was an off-year for Borgata Hotel Casino & Spa, to put it mildly. The MGM Resorts International-owned property posted the market’s largest declines in year-over-year brick-and-mortar gaming revenue, both in terms of real dollars ($372 million) and as a percentage (52.4%).
The sky isn’t falling in the Marina District, though. Borgata still outperformed the closest competitor by more than $110 million.
But, the year-end reports were something else entirely.
Borgata’s $650,000 in 2020 GOP was the third-lowest in the entire market, ahead of only Bally’s Atlantic City and Resorts Casino Hotel, which both posted operating losses. That figure is a far cry from the $209.6 million in gross operating profit reported by Borgata in 2019.
MGM had this to say in Borgata’s fourth-quarter notes: “…the Company is unable to determine when it will return to pre-pandemic demand and pricing, or if the property will remain re-opened, but the impact of COVID-19 had a material impact on the Company’s results of operations during 2020 and expects it will continue to have a material impact during 2021 and potentially thereafter.”
4) Hotel room bookings a (semi) bright spot in a gloomy year
One area that often gets overlooked when discussing the performance of Atlantic City casinos is the hotel. But all of AC’s casino hotels are a significant part of the business. The hotels require a large workforce and generate substantial revenue for casino operators.
Yes, the total number of booked hotel rooms and the annual occupancy rates were down in 2020. However, both metrics were not nearly as bad as they could have been.
The number of occupied room nights at casino hotels was 2.3 million, down 46.7% from the 4.3 million in 2019. The 61.7% occupancy rate in 2020 only slightly trailed the 78.9% in the prior year.
“Atlantic City casino hotels fared better than most regarding occupancy,” Bokunewicz said. “Average hotel occupancy rates in the U.S. during the pandemic remained below 50% even in the summer months.”
The average rate per occupied hotel room at Atlantic City casinos was $138.52 in 2020. In 2019, that figure was $142.11.
Working together, @AtlantiCareNJ, @UHLocal54, and @CasinosNJ are vaccinating our casino workers quickly and safely, helping keep Atlantic City’s economy moving forward. @FirstLadyNJ and I were glad this partnership in action today! pic.twitter.com/b0Sc1XxiwA
— Governor Phil Murphy (@GovMurphy) April 9, 2021
5) Optimism for an Atlantic City rebound
The year-end financial reports for Atlantic City casinos put a bow on one of the most unique and difficult periods ever endured by the gaming industry.
But, many experts, analysts, and industry insiders believe the rebound is already underway.
Bokunewicz noted that the data in the DGE report “tells a story of perseverance and adaptation in the face of significant obstacles.”
Plousis said Atlantic City casinos, “made a significant investment to prepare a safe environment,” and, “proved that in-person gaming could happen safely.”
“In March, (NJ) Governor (Phil) Murphy announced that hospitality workers were eligible for the COVID vaccine and stakeholders are working together to prioritize vaccinating casino employees by Memorial Day,” Plousis said. “As tourists return to the shore, they can have every confidence Atlantic City is safe for the summer.”