Optimism over growth, some wariness in Atlantic City in 2020

Business

In this Oct. 8, 2019 photo, a man makes a sports bet at Resorts casino in Atlantic City, N.J. In November 2019, New Jersey’s casinos and racetracks took in nearly $563 million worth of sports bets, a new monthly record. (AP Photo/Wayne Parry)

ATLANTIC CITY, N.J. (AP) —Atlantic City heads into 2020 with some optimism , buoyed by an expanded casino market with more jobs and more revenue.

But there is also some concern over whether all nine casinos will make it to the finish line of 2020, and whether nearby states will eat into Atlantic City’s main strengths right now: online gambling and sports betting.

2019 was the first full year that all nine casinos have been operating.Hard Rock, the former Trump Taj Mahal and the Ocean Casino Resort, the former Revel, both opened in June 2018. Largely because of the two additional casinos, Atlantic City’s in-person casino winnings at brick-and-mortar casinos were up 7.7% from January through November, to $2.4 billion. Adding internet gambling and sports betting money, the total rises to over $3 billion over that same period.

But the presence of the two new casinos was also a major factor in declining gross operating profits for the Atlantic City casino industry as a whole, down 4.5% to $484 million over the first nine months of the year compared to the same period a year ago.

How the city navigates the changing tides of the industry will determine the kind of year 2020 will be.

“I think we will see the city continue to adjust to the new gambling landscape,” said David Schwartz, a gambling historian with the University of Nevada Las Vegas. “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.”

The flip side of the concern about the effect the two new casinos are having on profits is the uptick in employment they brought. Nearly 6,700 people work at Hard Rock and Ocean, jobs that did not exist just a year and a half ago.

The new jobs come amid an already booming sports betting industry in New Jersey. Atlantic City’s casinos and two racetracks elsewhere in the state have made more than $111 million in sports betting revenue so far this year, compared with $40.8 million a year ago and nothing the year before that. Since the first bets were taken in June 2018, gamblers have plunked down more than $5.2 billion on sports bets in New Jersey.

And internet gambling revenue continues to increase as well, with $433 million taken in online by the casinos from January through November this year. That’s 60% better than the same period last year.

But amid the optimism lies some concern. Money from internet gambling and sports betting has to be shared among several parties including vendors and technology partners, and is not pure profit for the casinos. The gambling halls clearly want to bring more people through their doors.

Hard Rock President Joe Lupo and Tilman Fertitta, the billionaire Texas owner of the Golden Nugget, both predicted Atlantic City will not be able to support nine casinos indefinitely.

“This is a seven-casino market,” Fertitta said in September, while on a book tour in Atlantic City. “Nobody has the cash flow now that they had when it was a seven-casino market.”

Having sustained losses so deep that its former owner was forced to hand the business over to its main lender earlier this year, Ocean worked hard to improve its finances and grow its clientele during the busy summer months. Company officials insist it will still be going strong when the ball drops on New Year’s Eve 2020.

CEO Terry Glebocki calls Ocean the fastest growing casino in Atlantic City and said it is “better positioned today than ever before.”

Steve Callender, a top Tropicana executive and president of the Casino Association of New Jersey, believes all nine casinos are strong enough to survive.

“The new ones are growing their business and expanding their customer bases,” he said. “The pie hasn’t been getting much bigger, and we’re all competing with each other in a very aggressive market, but people know how to take care of themselves.”

Further complicating matters is the pending acquisition of Caesars Entertainment, which owns three Atlantic City casinos (Harrah’s, Caesars and Bally’s), by Eldorado Resorts, which owns a fourth (Tropicana). It’s possible that federal or state regulators may want the new company to divest one or more of its Atlantic City properties, or the company could choose to do so voluntarily.

But it’s not a given that Eldorado will pare its Atlantic City holdings: Until 2014, Caesars Entertainment had owned and operated four Atlantic City casinos without causing any antitrust concerns among regulators.

It’s even possible that Atlantic City’s casino market might move toward further expansion in 2020. Last March, Philadelphia Bart Blatstein, who operates the former Showboat casino as a non-gambling hotel, said he was considering restoring gambling either to the Showboat, or building a new casino facility on land he owns adjacent to it. Blatstein declined to discuss his updated plans for at least the next few months.

And 2020 could finally see new life for the former Atlantic Club casino, which has been dark since Jan. 2014. Colosseo Atlantic City Inc., a New York investment and construction firm, bought the property in October and announced plans to reopen it as a non-gambling hotel.

A sizable chunk of New Jersey’s sports betting revenue comes from New York gamblers crossing over into New Jersey to make bets on their smartphones. New York has been lagging on adopting sports betting outside its upstate tribal casinos, and mobile sports betting still isn’t allowed. If and when it does, the impact on New Jersey would be painful.

“The challenge will continue to be seeing casino revenue growth continue,” Lupo, Hard Rock’s president, said. “Most of the growth has been online gambling and online sports wagering. Can we keep people coming to the market and increase visitation?”

Follow Wayne Parry at http://twitter.com/WayneParryAC

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