Hard Rock Atlantic City has come a long way since welcoming its first guests on June 28, 2018.
Fast-forward to 2020, and the property is among the town’s top performers.
Jim Allen, CEO of Hard Rock International, spoke exclusively with Play NJ. Obviously, he is pleased about seeing returns on its $500 million-plus rebranding of the former Trump Taj Mahal.
This includes the booming NJ sports betting industry. Allen used the words “world class” to describe the Garden State’s regulatory environment.
“No jurisdiction in the world can rival what New Jersey’s doing. I think all of those things are absolutely excellent.”
For January alone, Garden State bettors wagered $540 million on sporting events. License holders reported $53.6 million in revenue for an eye-opening 185.2% year-over-year increase.
The hot topic of sports wagering is one of several that Allen discussed.
Hard Rock AC status check
Hard Rock’s casino brand remains to be a newcomer to the AC marketplace. At the same time, it’s outperforming properties that have been around since the late 1970s and ’80s.
Based on the figures released from the New Jersey Division of Gaming Enforcement earlier this week, the license holder ranked No. 3 in casino win with $21.5 million. That is good enough for a 38% year-over-year increase.
But if we look back at Hard Rock’s results for all of 2019, the property finished No. 2 in casino win ($324 million) and No. 3 in total game revenue ($350 million).
“We’re certainly very pleased with the results,” said Allen.
“To do that in our first year of operation up against some very successful brands like Harrah’s and Caesars, and Tropicana who have been there for 30, 40 years with 40 million people in their database, I think that’s something that we’re very encouraged about.”
The Atlantic City numbers game
One of the ongoing debates surrounding Atlantic City is the number of casinos.
More specifically, what is the correct number?
Back in 2014, four of the 12 casinos closed. The former Taj shut down operations two years later. The building included Atlantic City’s only Hard Rock Cafe, which remained opened prior to the sale. Hard Rock International purchased the property three years ago and started the transformation process.
The market is currently back to nine casinos, with the possibility of the neighboring Showboat getting back into the gambling business, too.
However, Allen said the answer doesn’t necessarily come down to a precise number.
“I don’t know if I have a specific comment on the correct number, but what I do feel very strongly about is that if there’s nine or 10, or five or six, the quality of the product that’s being offered is the most important thing,” said Allen.
So, when properties get ignored over the course of several years, it impacts the market.
“To have facilities open that haven’t been renovated in (a number of) years, whether it be room product or public areas is, to me, the most important part of the conversation. It becomes detrimental if proper reinvestment in capital expenditures into the buildings doesn’t occur.”
More on ‘world class’ NJ sports betting
Allen did bring up the point that the profit margin for sports betting, on the downside, is 2%-3%, and on the good side, 5%-7%.
The bulk of that wagering is taking place via mobile and online devices. Hard Rock reported $336,466 in sports betting revenue, which includes a loss of $4,667 from its retail operation.
“Certainly, the online business can become more profitable. But there’s just a business model that needs to be absorbed,” said Allen.
Competing with DraftKings and FanDuel
The two brands are dominating the market. Last year alone, Meadowlands Racetrack (FanDuel’s land-based partner) reported a tad under $150 million in sports wagering revenue. Resorts Digital (home of the DraftKings app) earned $79.6 million.
For comparison purposes, Hard Rock came in at $3.5 million.
Allen said Hard Rock has focused on having a conservative balance sheet and being profitable.
“Well, certainly there are some sites that are driving more volume. But frankly, we’re profitable, so we are happy with the profit.”
“We certainly want to continue to grow that,” said Allen.
“But when you’re competing against brands such as FanDuel or DraftKings where they are spending just a monumental amount of money on TV advertising, et cetera, we just think that’s a process that needs to be worked through.”
The property did go all-in with this year’s Super Bowl. Hard Rock Live at Etess Arena hosted a viewing party for 2,000 fans. A couple of betting windows were temporarily added to the concession area.
It could be the first of many more Super Bowl betting parties to come.
Hard Rock makes Internet gaming history
And it’s a part of the business Hard Rock is not ignoring. Earlier this week, the casino unveiled the world’s first live slots studio.
Call it the next significant development to the online gaming portfolio, and only Hard Rock online customers have access to the machines.
The license holder reported $2.5 million in internet gaming revenue for January. While the number pales in comparison to Golden Nugget’s $21.2 million, Hard Rock experienced a 51.7% year-over-year increase.
Allen said Hard Rock is “very encouraged” with the site and the overall numbers, as well as with the way the market is growing.
“I definitely think it’s part of Atlantic City’s future, but frankly, I think it’s part of gaming, in general,” said Allen.
“The business model is changing. I don’t think you’re going to see the elimination of brick-and-mortar casinos, but certainly, the percentage of online activity, I believe, will continue to grow in an upward way.”
Hard Rock’s eye is on Atlantic City
Allen made an Atlantic City appearance back in January as part of Hard Rock’s town hall meeting with employees. He talked about how “Atlantic City is going in the wrong direction.”
Besides street lights being out, one of the major issues is that the former Trump Plaza has been closed for five-plus years. Those who walk up to the windows will notice trash the ground (and who knows for how long).
And this shuttered building is the centerpiece of the famous wooden walkway.
At the Downbeach section, there is former Atlantic Club (aka Golden Nugget, Bally’s Grand and Hilton), which closed the same year.
These are not exactly great images for this Jersey Shore resort.
“I want to be positive-minded here,” said Allen.
“The only word that comes to mind is it’s embarrassing that the ownership of the old Trump Plaza in the old Atlantic City Hilton … Atlantic Club, I guess, that was its last brand on it, the city, the CRDA, the Senate, the House, the governor can’t understand the significance, the negative impact, that is created by these buildings … Not only a safety hazard, literally, you have debris falling off the side, but just what an eyesore it is.”
So, what’s the solution?
Having someone in a leadership position step up would be a good start.
“We have called out the city, the mayor, the governor, the House, the Senate. We’re hopeful that they’ll come together and get something done,” said Allen.
Either way, Hard Rock is committed to Atlantic City’s future.