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How have Ocean Casino Resort and Hard Rock shaped Atlantic City's gaming market?

ATLANTIC CITY — As the Boardwalk’s two newest casinos prepare to celebrate one-year anniversaries later this week, the impact those properties have had on the Atlantic City market has started to take shape.

Prior to the June 27, 2018, openings of Hard Rock Hotel & Casino Atlantic City and Ocean Casino Resort, experts and executives questioned, both publicly and privately, whether the city could sustain nine casinos after a decade of declining revenues and the closing of five gambling halls in a two-year span.

To date, the results have been mixed.

Total gaming revenue for the entire market has increased for 12 consecutive months, but some of that growth has come at the expense of the existing operators. Increased revenue from internet gaming and sports betting have helped offset loses for a handful of properties.

The infusion of additional gaming options to a market that had been relatively flat for two years was bound to impact the other properties, industry experts say.

GALLERY: Hard Rock and Ocean Resort celebration continues into the night

“Obviously, if you keep adding casinos, you’re going to diminish the overall performance of the existing ones,” said Brian McGill, managing director and senior research analyst for Telsey Advisory Group, while speaking at a recent gaming conference in Atlantic City.

Across the entire Atlantic City market, total gaming revenue has increased each month since June 2018. With the addition of Hard Rock and Ocean, as well as legalized sports betting, the market increased total gaming revenue by 7.5% in 2018 and more than 21% through the first five months of 2019.

Since June of last year through May of this year, Hard Rock has reported nearly $288.5 million in total gaming revenue. Over the same period, Ocean has reported more than $181.6 million, according to data from the state Division of Gaming Enforcement.

Both Hard Rock and Ocean generate less revenue from online gaming than every other operator in the market, which can be attributed to their recent arrival. Additionally, both properties began casino hotel operations last year without customer databases to build on.

Joe Lupo, president of Hard Rock Atlantic City, noted his property’s table game revenue was second in the market in May and fourth in slot revenue, which he deemed a “home run.”

“Our goal wasn’t to make money for 10 months,” Lupo said. “Our goal was to make money the next 10 years. We’re here for the long run.”

Ocean went through an ownership change at the end of last year, and the new operators shifted the property’s focus to concentrate more on the casino itself, said Mike Donovan, chief marketing officer and vice president.

“We’ve corrected a lot of the core, fundamental issues, and we’ve increased business to the property at the same time,” he said. “I think ownership is happy with the change that we’ve been able to make in a very short period of time. I think that we’ve largely eliminated the losses associated with the property.”

The change in philosophy is paying dividends. Donovan said May’s slot revenues of nearly $13.5 million were the highest in the property’s history. He also said June’s total gaming revenue figures, which include tables, slots, sports betting and online gaming, would set a property record.

“As long as we focus on having a successful casino, the property as a whole will be successful and we’ll be here for a long time,” Donovan said.

Gross operating profits, a widely accepted measure of profitability in the Atlantic City casino industry, have been in the red for the two properties since they opened. Hard Rock reported a loss in gross operating profits of more than $9 million in 2018 and $6.1 million in the first three months of 2019. Ocean reported even larger loses of $17.87 million in 2018 and $10.3 million in the first quarter of this year.

Given the financial investment required to open a casino, including attracting new players, hiring and training staff, purchasing equipment and capital improvements, coupled with the challenges of entering the ultra-competitive Atlantic City market, it is not an anomaly that neither has reported an overall gross operating profit.

Soft opening of Hard Rock and Ocean Resort Casinos

“Going through the winter, after only (being) open a few months, if somebody had an expectation of us making a lot of profitability, then that person really doesn’t know the market or understand opening a casino in Atlantic City,” Lupo said.

“We intend to be profitable moving forward,” Donovan said. “We don’t take anything for granted. We know how hard it is to build a property from scratch and how hard it is to get players to change their habits of going to the other places and get them to come to your property.”

The dual openings caused the existing properties to ramp up promotional expenses and capital investments, which put a strain on their bottom lines.

“Since the two new properties opened in June of last year, there’s been an unprecedented capacity added to the market,” said Mark Giannantonio, president and CEO of Resorts Casino Hotel, during the recent East Coast Gaming Congress. “But it’s very predictable, and it’s very typical of the Atlantic City market to try and defend your market share.”

Bob Ambrose, an adjunct professor of casino management at Fairleigh Dickinson University, said the two properties have created a more competitive market balance in both gaming and nongaming amenities.

“Their investments have helped to infuse more confidence in the entire Atlantic City market,” Ambrose said. “This is positive news which helps to create investor interest and partnerships.”

SEEN: Grand Opening of Ocean Resort Casino, Hard Rock Casino & Hotel in AC

Overall, the addition of Hard Rock and Ocean has been a net positive for Atlantic City, said Matt Doherty, executive director of the Casino Reinvestment Development Authority, during the ECGC.

“It’s nice to have real diversity (in the market),” he said.


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Matthew Strabuk / For The Press  

On June 21st 2019, at the Ocean casino, Celebrity Mark Wahlberg officially opens the Atlantic City location of his family’s restaurant.


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Transportation
How Atlantic City can become bike-friendly

ATLANTIC CITY — Cyclists riding down Pacific or Atlantic avenues might feel the rush of wind on their backs as trucks, cars and jitneys stream past them.

“It gets real dicey,” said Mary Cieslak, 36, who bikes from her shore house in Ventnor on the border of the city. “I’ve actually had little girls that I nanny down here, and they’re on the back (of the bike). And then I really get scared.”

Some riders might be tempted to hop the curb and join pedestrians on the sidewalk to avoid a sideswipe.

Who could blame them? For a seaside resort, and a city with a poverty rate significantly higher than those of neighboring municipalities, Atlantic City’s streets do not exactly welcome the comparatively cheap form of getting around.

“They haven’t been putting in the infrastructure that’s sort of known to save lives,” said James Sinclair, research coordinator for the New Jersey Bicycle and Pedestrian Resource Center at Rutgers University.

Bike lanes were proposed for Atlantic and Pacific avenues and other corridors in a comprehensive bike and pedestrian safety plan that was released in 2013 but never gained traction.

The report, compiled by a Virginia company for the city and the New Jersey Department of Transportation, also recommends traffic-calming measures in high pedestrian areas like center median islands and curb extensions, and increased Boardwalk hours for bikers, which, in peak season, are only allowed on the boards from 6 a.m. to noon.

There is one bike route in Atlantic City, according to Director of Planning Barbara Woolley-Dillon. It starts in Gardner’s Basin and runs to South New Jersey Avenue and the Boardwalk, but does not include dedicated lanes, only chevrons and “Bike Route” signs.

City Engineer John Mele said another bike route will be put in place later this year that will run on Atlantic Avenue from Jackson Avenue to Albany Avenue, and then on Ohio Avenue between Atlantic and Riverside avenues in Venice Park, skipping over the most heavily traveled portion of Atlantic Avenue. If the timing is right, it could be introduced to the city around the same time as a new bikeshare program, which Woolley-Dillon said is forthcoming.

To some residents, Atlantic City still has a ways to go.

“I have (ridden) around this town — the entire town — on my bike at different times,” said Geoff Rosenberger, a member of the 1st Ward Civic Association and a South Inlet resident. “It is very difficult to ride a bike on any of our main thoroughfares because of traffic patterns and because of width.”

While it’s safe to bike the neighborhoods, Rosenberger said he wouldn’t recommend cross-town travel for a kid.

“What you can’t do is traverse the city end to end easily as a child on a bike,” Rosenberger said. “It’s just not safe.”

That assessment is alarming considering Atlantic City is an urban center with a 40% poverty rate, meaning fewer households own cars.

According to an analysis of Census Bureau data by datausa.io, the average household in Atlantic City owns one car, compared with two cars statewide.

A quick look at other shore towns reveals the safety and convenience that could have been made available for cyclists in the resort if the city followed through with the 2013 recommendations.

Ocean City is a great example of a town that puts an emphasis on bikeability, Sinclair said.

From biking to buses, how to get around Atlantic City

ATLANTIC CITY — Like he does most afternoons, Edward Selva, 26, waited for the jitney near Columbia Avenue to pick him up for work. The Lower Chelsea stop is convenient for the 26-year-old food service worker, who lives nearby.

Much of the progress there is thanks to activists like Tom Heist, 55, who says the town has become much more bike-friendly in the past 12 to 15 years. It took consistent pressure from hobbyists and activists to gain the ground they did.

Heist is a co-chairman of Bike OCNJ — once a city subcommittee that promoted physical fitness, now a group of volunteers — which lobbies the city for amenities to make it safer and easier to bike there, including bike lanes, reduced speed limits, more stop signs and places to put air in tires.

Bike racks were installed outside restaurants and other points of interest, and kids returning from school can now bike on the Boardwalk after noon, the cutoff for riders.

People have been biking in Ocean City for decades, Heist said. “But early on, it was kind of like take your life into your own hands.”

That has changed, Heist said, and more people are biking.

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Perhaps the biggest improvement has been the implementation of a safe biking corridor, which links a number of streets that run from the Ocean Cit y-Longport bridge to Corsons Inlet.

It allows cars, Heist said, but encourages bikers to take the route and discourages drivers from using it, using “sharrows” or chevrons and bike icons painted on the road, and “HAWK signals” or buttons that stop traffic for cyclists and pedestrians to cross.

Sinclair said bike infrastructure in Ocean City is added while roads are repaved, which means the added cost is minimal.

Back in Atlantic City, while stopped at Delaware and Pacific avenues, Pete Burke, 46, and Stacy Kunze, 44, of Delaware County, Pennsylvania, took a breather after hours of riding bikes. They didn’t find it too tough, and said drivers gave them the right of way in tight spots.

“It wouldn’t hurt to have a bike lane,” Burke said. “But we still get by.”

Rosenberger said the city’s flat terrain makes it perfect for biking. He suggested diagonal parking on Atlantic Avenue and opening up a lane for bikes only.

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“(The city) never considers anything outside of the box,” he said. “There’s never foresight into the future.”

It could take a push from residents similar to the one in Ocean City to get officials to consider biking more than just a side issue, as residents’ needs should be weighed alongside tourists’ needs.

“Biking isn’t just about leisure,” Heist said. “It’s about transportation.”

People are talking about how to reinvent Atlantic City. Join the conversation here.


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