ATLANTIC CITY — Casino profits were down almost across the board for the second quarter of 2019, according to state gaming regulators.
Industrywide gross operating profits for the April-June period fell 6.8% compared to the same period last year, based on figures released Thursday by the state Division of Gaming Enforcement.
The $159.3 million reported by the city’s nine casino properties was nearly $11.5 million less than the figure reported in 2018, when only seven casinos were operational for the whole quarter.
The quarterly profit losses for the industry are in stark contrast to monthly gaming revenue reports that have shown increases for more than a year. A 13-month streak of double-digit percentage increases in gaming revenue was snapped in July — the first full month of revenue reporting that compared the nine-casino market evenly — when total gaming revenue was up only 7.8%.
Borgata was the only existing casino property to post a profit increase (4.7%) in the quarter.
The second-quarter losses signal that the Atlantic City market has not grown despite an increase in the number of casinos in the resort.
Hard Rock Hotel & Casino Atlantic City and Ocean Casino Resort both opened in late June 2018 at the very end of the quarter.
Gross operating profit is a widely accepted measure of profitability in the Atlantic City casino industry.
James Plousis, chairman of the Casino Control Commission, noted that net revenue — which reflects gaming revenue, minus all promotional allowances, plus room, food and beverage and other nongaming revenues — was up 18.2% for the quarter, which is the fifth consecutive reporting period of growth for the industry.
“Results from individual casinos show the market was still adjusting to the new level of competition through the second quarter,” Plousis said in a statement. “Next quarter will provide an opportunity to compare year-over-year results in Atlantic City’s nine-casino market.”
Through the first six months of 2019, gross operating profits for Atlantic City casinos are down 16.8% compared to the first half of 2018. The industry has reported operating profits of $245 million through the first two quarters of 2019, down from $294.5 million over the same period in 2018.
Hard Rock, which spent more than $500 million renovating the former Trump Taj Mahal Casino Resort, reported gross operating profits of nearly $11.3 million in the second quarter and $5.1 million for the first six months of 2019.
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“We are very pleased with our continued success and increased profitability,” said Joe Lupo, property president of Hard Rock Atlantic City. “However, the second-quarter operating profits show that the increased top-line revenue growth reported monthly is not generating the same increase in operating profits. This speaks to the supply in the market and third-party online providers who are generating most of that top-line, monthly gross revenue reported.”
Ocean reopened the shuttered Revel Casino Hotel last year but struggled out of the gate to gain a foothold in the competitive Atlantic City market, losing nearly $23 million in seven months. In February, Luxor Capital Group, a New York-based hedge fund, assumed ownership of the $2.4 billion resort.
Ocean reported an operating profit loss of nearly $1.2 million in the second quarter and is down $12.75 million for the year.
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Mike Donovan, chief marketing officer and senior vice president of Ocean, said management was “pleased” with this quarter’s results and added figures “would have been even better but for several large table games winners in the quarter.”
“Over the last quarter, we have dramatically improved our operating results and we are focused on growing our business for the future. In the second quarter, we saw our highest market share in the property’s history and a significant increase in casino, hotel and nongaming volumes,” Donovan said. “We are profitable today, and management will focus on remaining cash-flow positive moving forward. We are committed to providing an outstanding customer experience at Atlantic City’s newest casino.”