Atlantic City’s dozen casinos saw gross operating profits fall by 64 percent in the first quarter, regulators said Wednesday.
The industry posted a $42 million gross operating profit during the first three months this year — far below the same period last year when profits were $114 million, but an improvement from the fourth quarter, when the industry took a nearly $19 million operating loss due to Hurricane Sandy.
Revel, which has been open for only a year and just emerged from bankruptcy, posted the highest gross operating losses of nearly $41 million during the first quarter, according to figures released Wednesday by the New Jersey Division of Gaming Enforcement. Without Revel, the industry’s gross operating profits netted $82 million, still 28 percent off its performance last year.
Jeffrey Hartmann, interim CEO of Revel, said the first-quarter losses came as no surprise amid the casino’s ongoing financial challenges.
“It was part of the same troubles that plagued us through 2012,” he said.
Revel emerged from Chapter 11 bankruptcy protection Tuesday under the new ownership of its lenders. The bankruptcy reorganization reduced Revel’s debt from about $1.5 billion to $272 million, removing much of the financial burden that threatened the casino’s survival.
Hartmann leads the new executive team brought in by lenders to oversee Revel’s reorganization. He said he remains encouraged by the dedication of Revel’s employees as efforts get under way to revitalize the casino resort with new attractions and a new marketing strategy.
In addition to decreases in profitability, the industry had a nearly 8 percent drop in net revenue, nearly 2 percent decrease in room revenue and 12 percent downturn in casino revenue, according to the gaming enforcement division.
At the same time, entertainment and other sales at casino hotels increased by 7 percent, to $38 million. Third-party sales — or revenue derived from independently operated restaurants, stores and other entities inside casino hotels — also increased by 33 percent, to $56 million. The rise coincides with the opening of Revel, where most of the retail establishments are operated by third parties.
Nongambling revenue continues to improve, with luxury taxes over the past 12 months growing by 13 percent to end at $36 million, regulators said.
Individually, nearly all of Atlantic City’s 12 casinos saw decreases to their gross operating profits, which represent earnings before interest, taxes, depreciation, amortization, affiliate charges and other miscellaneous items.
Among the four that saw improvements year over year, three remained in the red, with Atlantic Club Casino Hotel netting a $3 million gross operating loss, Golden Nugget Atlantic City a $2 million loss and Trump Plaza Hotel and Casino a $1 million loss. Only Tropicana Casino and Resort was able to turn a quarterly gross operating loss of $1.5 million during the first quarter last year into a $2 million profit during the same period this year.
Borgata Hotel Casino & Spa led the industry with a $29.3 million gross operating profit in the first quarter. But that also represented a nearly 27 percent decline from a year ago.
Tom Ballance, president of Borgata, said the casino’s stellar performance in the first quarter of 2012 created a tough comparison for 2013. In 2012, Borgata had its best first quarter in five years, reaping $39.9 million in gross operating profit.
Still, Ballance said he was pleased with Borgata’s financial results in the wake of Sandy. The hurricane’s lingering effects have been blamed for costing the entire casino industry millions of dollars in profits.
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