The shutdown of the casinos in Atlantic City due to the COVID-19 pandemic is about to enter its second month. As it does, there are questions about the post-pandemic future of the Boardwalk and a town reliant on casino revenue.
Will it be able to survive this shutdown? Will all nine casinos in Atlantic City return intact once the order is lifted?
The COVID-19 pandemic struck at a terrible time for Atlantic City. The city was in a bit of a fiscal up-swing thanks to the 2018 openings of the Hard Rock Atlantic City and Ocean Casino Resorts.
The two new additions to AC’s casino lineup contributed to over $3.2 billion in revenue last year. That is a 15% increase over last year.
Unfortunately, whatever surplus was created with the opening of those two casinos could be erased if this shutdown extends into the summer.
According to an article in the New York Post, this shutdown is costing the casinos and the state $540 million a month. If the numbers continue to trend that way, the results could be disastrous for Atlantic City and the casinos.
Clyde Barrow, a college professor, and a casino industry expert, said the situation is dire.
“We haven’t seen it play out yet, but if you look at the economic numbers that are going to start coming out in the coming weeks, this portends to be a worse economic downturn than we even saw in the great recession.”
There is more at risk than just AC casinos
Another fact that can’t be lost during the casino shutdown is the impact that the casinos have on the rest of the town. The fate of the two entities is forever in lock-step, and as one goes, so goes the other.
“You think of just casinos on the casino floor, but it impacts all kinds of different elements, in terms of visitation, tourism, hospitality,” said Roger Gros, publisher of Global Gaming Business magazine, to NJ101.5.
To help the small businesses that depend on the casinos to attract customers to their companies, the Casino Reinvestment Development Authority (CRDA) called for an emergency meeting on April 7. The state agency tasked with taking funds gathered from various taxes and fees at casinos hopes to approve the use of $2 million in funds to help small businesses.
Executive Director of the CRDA, Matt Doherty told the Press of Atlantic City that over 1,000 different businesses in Atlantic County have applied for grants of $5,000.
The CRDA was also impacted by the shutdown as its future outlook was downgraded from “stable” to “negative” by Fitch Ratings.
The reason for the downgrade is “significantly increased uncertainty regarding the collection of luxury tax revenues commensurate with the material disruption in leisure, convention, and gaming markets, which may last for an extended period of time.”
How AC casinos will survive
Fortunately, online casinos in NJ are still bringing in revenue, which contributes to the casino’s overall bottom line. However, online casino revenue lags far behind land-based casino revenue. And it is unlikely to make up more than a small portion of the shortfall.
February 2020 saw Atlantic City bring in $287 million. Casino betting accounted for $210 million, while only $52 million was brought in through online gaming.
To make up the difference, casinos are trying to amass as much liquidity as possible. It is essential to try to weather this shutdown for as long as it may go. One way they did that was by laying off over 16,000 casino workers.
Colin A. Mansfield, a Fitch Ratings analyst, told Law360 that casinos should prepare for the long haul.
“When you’re staring into the face of unknown timing around how long these properties will be closed for health concerns … you want to be positioned as best as you can to ride that out as long as you can.”
Going the liquid route brings risks with it. It will keep the casinos going in the short term. Of course, the debt that will eventually have to be paid. That means the more fiscally solvent casinos will be able to ride it out.
All of these different factors point to a bleak outlook in regards to Atlantic City and its casinos. As the shutdown goes on and starts to move into warmer days, it will be tougher for these casinos to be able to survive on merely online gaming alone.
AC casinos will rebound, they always do
This isn’t the first time the casino industry in Atlantic City has been on the ropes, however. It has weathered all types of storms over the years, ranging from fiscal and legal to meteorological.
Somehow, someway, Atlantic City will adapt, as it always does.
Before the pandemic, there was talk surrounding a tenth casino. Now, people are wondering if all nine will survive if the shutdown were to last for months.
We should be prepared that the Boardwalk and how casinos do business may change.
Many casinos have come and gone throughout the decades. And through it all, Atlantic City has still found a way to keep going.
“I think we will see the city continue to adjust to the new gambling landscape,” said David Schwartz, a gambling historian at UNLV to the Morning Call.
“Sports betting and online betting will continue to grow in importance. Anything that gives people a reason to visit Atlantic City in person when there are plenty of places to gamble closer to home — including home — will be key.”