With apologies for stating the obvious, 2020 was a year unlike any other in the long and storied history of Atlantic City.
The coronavirus pandemic drastically affected the city and its casino industry in ways that had never been considered, including a nearly four-month shutdown. The ensuing government restrictions stunted the industry’s ability to recover and resulted in thousands of lost jobs.
On the flip side, online gambling and sports betting performed at previously unheard-of levels, setting record after record, month after month. New Jersey distinguished itself from other gaming jurisdictions as a clear leader in both segments.
As 2021 arrives, here are five things to watch for in the Atlantic City casino industry.
1. Get Well Soon, Atlantic City
Unquestionably, the biggest story in 2021 will be the health of the Atlantic City gaming industry. How long can Atlantic City casinos survive under current conditions? How quickly will brick-and-mortar casinos bounce back once the virus is under control?
The Atlantic City casino industry wants nothing more in 2021 than to forget 2020 and return to pre-pandemic market performance.
Beginning in June 2018, the Atlantic City gaming industry reported 21 consecutive months of year-over-year total revenue increases.
In 2019, the entire industry eclipsed the $3 billion gaming revenue mark for the first time since 2012. Sports betting results in New Jersey were challenging (and occasionally exceeding) those in Nevada. Online casino gaming was growing every month and more options were being offered.
All signs pointed to 2020 being a banner year for Atlantic City casinos.
But on March 16, the casinos were closed by order of New Jersey Gov. Phil Murphy to mitigate the spread of COVID-19. The industry reopened in July.
Nothing in Atlantic City casinos has been the same since.
Capacity limitations, smoking bans, mandatory masks, food and beverage restrictions, partitions at table games and disabled slot machines have altered the casino resort experience.
The good news is COVID-19 vaccinations are being administered nationwide and a semblance of normalcy is on the horizon.
Most industry experts believe drive-in or regional gaming markets, such as Atlantic City, will recover faster than destinations that cater to air travelers. But only time will tell.
2. The Battle For Sports Betting Supremacy
There is a bit of poetic justice in the fact that New Jersey is the new leader in the clubhouse when it comes to sports betting. After all, it was a legal challenge brought by the Garden State which led to the US Supreme Court’s decision to strike down the federal ban in 2018.
In 2020, New Jersey stepped up its sports betting game. More than $5 billion in sports wagers were placed in New Jersey through November, nearly $1.3 billion more than in Nevada.
New Jersey sports betting really started heating up in August, setting a national record of $668 million in total wagers. The next three months continued to shatter records, culminating with a $931.6 million total handle in November.
Online sports betting accounted for $4.6 billion of the total year-to-date handle, or nearly 92% of all bets placed.
But competition has arrived and more is coming.
- Pennsylvania online sports betting went live in 2019, taking a portion of state-border hopping bettors from New Jersey
- New York has had an on-again, off-again relationship with online sports betting, but state lawmakers have yet to act. If (when) NY online sports betting happens, New Jersey will lose another chunk of out-of-state bettors.
3. Does NJ Online Casino Have A Ceiling?
Online gambling launched in New Jersey in 2013 and, well, the rest is history. Annual internet casino revenue has increased by no less than 21% every year since.
In 2019, more than $482.6 million of revenue was generated by internet gaming, almost 15% of the entire industry’s total annual revenue.
But 2020 was a whole different story. With brick-and-mortar casinos closed for months on end and people stuck in their homes because of COVID-19, online gambling exploded in New Jersey. Triple-digit percentage increases in year-over-year online gaming revenue occurred every month of the brick-and-mortar shut down.
Golden Nugget Atlantic City’s reported revenue from internet gaming is more than three times (!) the year-to-date total from table games and slot machines.
Through November, nearly $871 million of Atlantic City gaming revenue has come from internet casinos, almost 37% of the industry’s annual total.
While maintaining a comparable level of growth in 2021 is unrealistic, there is little evidence to suggest that New Jersey’s online gaming market has plateaued.
4. Bally’s Revival
In almost any other year, the sale of Bally’s Atlantic City would have been a major story. Instead, Twin River Worldwide Holdings’ purchase of the Boardwalk casino for $25 million was almost an afterthought.
However, by year’s end, the plot thickened. TRWH purchased the Bally’s name from Caesars Entertainment Inc., and renamed itself using the iconic brand.
The new Bally’s Corporation also pledged to spend at least $90 million over the next five years to upgrade and renovate the aging casino hotel. As part of the sale’s approval, state gaming regulators stipulated that at least $25 million should be spent in the first 12 months and a minimum of $75 million in the first three years.
While Bally’s Corp. is a new player in Atlantic City, the company’s executive team features a handful of market veterans who know what it takes to succeed there.
5. Caesars Inc.’s ‘New’ Reign in Atlantic City
Another major casino merger in 2020 was the former Eldorado Resorts Inc.’s deal with Caesars Entertainment. The former essentially bought out the latter for more than $17 billion, taking over the Caesars name and player loyalty program.
Caesars now operates three Atlantic City casinos: Caesars Atlantic City, Harrah’s Resort Atlantic City and Tropicana Atlantic City.
Similar to Bally’s, the new Caesars committed to spending significant amounts of money in Atlantic City to upgrade and renovate its properties. How significant? More than $400 million over the next 36 months.
The capital expenditure plan for all three casinos submitted to state gaming regulators includes nearly $160 million in hotel room renovations, $31 million for new gaming equipment, $16 million for food and beverage upgrades, $5 million for pool area enhancements and more than $63 million in yet-to-be-named projects.
Caesars is an important brand in Atlantic City and the company’s investment in its properties will be critical to the entire industry’s recovery.
Because 2020 was such a terrible year, here’s a bonus story to keep an eye on in 2021.
Borgata Hotel Casino & Spa is the top dog in Atlantic City, and it’s not even debatable.
But the market’s two newest properties — Hard Rock Hotel & Casino Atlantic City and Ocean Casino Resort — are gaining ground.
Borgata’s parent company, MGM Resorts International, has been among the most aggressive operators in terms of mitigating profit losses this year by reducing labor expenses. In other words, MGM has cut a lot of jobs, including at Borgata.
On top of that, a handful of long-time, top-level Borgata employees have left to work for the two up-and-comers in Atlantic City.
No one is going to make the argument that Borgata’s reign as the highest-performing Atlantic City casino is in jeopardy. But 2021 may just be the year that Borgata has to work a little harder as others in Atlantic City start to nip at their heels.