Atlantic City casinos record profit losses in Q3 with revenues having dropped 37.2%. Atlantic City’s 9 casinos collectively generated more than $150.5 million in gross operating profits for the year’s 3rd quarter, which although disappointing wasn’t as bad as 3 months prior. During the same period last year, casinos in the city generated almost $240 million in gross operating profits.
Even though the economic impact of the pandemic has been devastating especially for brick and mortar casinos, things are slowly starting to look up with the return of live entertainment in Atlantic City. These results have simply confirmed what everyone knew all along, that the pandemic has and will continue to suppress the people’s demand for brick and mortar casino gaming services and activities.
But just because consumer demand is now suppressed doesn’t give casino operators any wiggle room. Instead, the cost of operating physical gaming services and amenities has gone up, which has left casino operators and their employees in quite the conundrum. Many operators have been forced to lay off thousands of workers in a bid to bring down costs, but it hasn’t been helping much.
Brick and mortar casinos feeling the most pinch
AC’s casinos were closed off earlier in the year in March as a means of mitigating the spread of the pandemic. They remained closed to the public almost for the entire 2nd quarter, which resulted in millions in operating losses for the quarter, $112 million to be exact.
Upon reopening, occupancy was capped at 25% while indoor dining and beverage service did not resume until much later in September. Even after re-opening, casinos haven’t been able to hold any large-scale live entertainment events whether concerts, trade shows, or conventions, which were the fodder of the city’s economy.
There seems to be some reprieve though as Atlantic City slowly prepares to usher live entertainment back into the city. Of course, resorts and casino operators will have to maintain the recommended 6 feet distance and other safety protocols to keep their guests safe. Additionally, guests shouldn’t expect any big names or entertainers to be gracing the state just yet.
Rather, the entertainment will be limited to small-time performers and acts as people wait this pandemic out. But the damage has already been done. The almost 4 months that casinos were closed have taken a toll and it will be some time before reprieve is felt.
So far year to date, the brick and mortar casinos have generated a total gross operating profit of a little more than just $68 million, a remarkable deterioration of nearly 86%. Bally’s and Borgata did not resume operations until much later after Hard Rock and Resorts Casino had already been in business for some time.
Many of the hotels were unprepared for a pandemic. The majority of the city’s casino operations had made prior unplanned investments and purchases such as extending employees’ medical benefits, installing air systems, and things of that nature before the mandated shutdowns. Of course, a lot of the employees have since been laid off or furloughed owing to restrictions.
Casino resorts and hotels have also been forced to redirect the few funds they had waiting on the wings towards buying protective equipment for both guests and employees. The added expenses have gone a long way in encouraging patrons to return to AC casinos. However, it hasn’t been enough to boost the bottom line considerably.
Meanwhile, online gaming and sports betting enjoying wins
US sports wagering records have been one of the most severely affected by the pandemic owing to the suspension of live sporting events. However, in the last few months since live sports have returned, sports betting revenues have seen a stark improvement as we’ve talked about here, a situation that is expected to persist as long as live sporting events continue to be available.
The state’s online casino and poker licensees are the only ones that have had a good year. With the pandemic forcing many individuals to stay at home sheltering, many punters in the state turned to online gaming and poker for a fix. For October, online casinos and poker licenses in the state generated revenue amounting to $93.45m, more than double the amount generated during the same period in 2019.
Online casino revenue for October came in at $91m while online poker, on the other hand, recorded $2.5m. overall online revenue has gone up to reach $779m, with casinos generating $745.7m and poker $33.4m. Individually, the Golden Nugget posted the highest revenue numbers for its online casino as we’ve covered here at $28.1m.
Online gambling has been a godsent for casinos that offer the vertical. That’s why more and more operators are willing to invest in expanding their online gambling products. For instance, Wynn recently announced that it would be investing a huge portion of funds on Wynn Interactive, the company’s IGaming and sports betting app as we’ve discussed here.
Like many brick and mortar operators, Wynn has suffered significant revenue losses owing to the mandated shutdowns earlier in the year and today’s continued restrictions. Now to offset the losses, Wynn plans to invest $ 80 million to generate growth, as well as expanding its digital offerings.
Similarly, Caesars Entertainment also has plans to launch its Caesars iGaming app. Caesars has experienced great success with its online casino as it is now on track to generate $150 million in revenue. Add to this dynamic its vibrant sportsbook and Caesars will be able to weather the storm.
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