Atlantic City Casino Industry Reports 15% Decrease in Q1 2023 Profit

According to the Associated Press, the Atlantic City casino industry had an almost 15% drop in gross operating profit during the first quarter of 2023 compared to the same period last year. The findings were disclosed on May 22, 2023 by the New Jersey Division of Gaming Enforcement, the industry’s regulatory agency, revealing that the city’s nine casino operators incurred greater operational costs throughout the period, affecting their profitability.

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Lower Profitability

The Atlantic City casinos made an operating profit of $135.4 million in the first quarter of 2023, which was $23.6 million less than the previous year’s first quarter, signifying a 15% decline. The casinos’ increasing running costs were blamed for the drop in profitability.

Rising Labor Costs

According to James Plousis, chairman of the New Jersey Casino Control Commission, higher costs, mostly due to higher pay paid to staff members such as housekeepers, porters, bartenders, and beverage servers, contributed to poorer profitability. These wage hikes were negotiated as part of a labor deal with employees last summer.

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Plousis reportedly said: “Compared to the first quarter last year, the casino hotels are employing more people and a progressive labor agreement was reached. These steps are emblematic of an industry that is preparing for growth and success.”

Gross Operating Profit and business Outlook

Gross operating profit (EBITDA) is a commonly acknowledged measure of profitability in the business. It represents earnings before interest, taxes, depreciation, amortization, and other costs. Plousis stated that the industry’s job expansion and labor agreement signaled a readiness for future growth and success.

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Individual Casino Profitability

Among the individual casinos, Bally’s recorded a $88,000 operating profit, compared to a $6.8 million loss in the same period last year. Ocean Casino Resort increased its profit by 27.6% to $23.6 million, while Harrah’s profit increased by 21% to $19.2 million. Caesars increased its profit by 7% to $11.3 million, while Resorts lost $284,000, compared to a profit of $527,000 in Q1 2022.

The Borgata’s profit fell by more than half to $22.8 million, while Hard Rock’s fell by 17.5% to $22.2 million. Tropicana’s profit fell 15.3% to $16.7 million, while the Golden Nugget’s profit fell to $4.8 million, down from $5.6 million in Q1 2022.

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Online Operations

Resorts Digital increased its operational profit by 6% to $8 million, while Caesars Interactive Entertainment NJ decreased by 13.2% to $6.8 million. Room rates varied from $113 to $212, while the overall resort occupancy rate for the first quarter of 2023 was 65.2%, up 2.1% from the previous year.

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