Atlantic City Skyline

Skyline of Atlantic City, Tuesday, May 28, 2019. (VERNON OGRODNEK / For The Press)

ATLANTIC CITY — Since the introduction of casinos in 1978, the gaming industry in Atlantic City has constantly evolved and responded to both internal and external market factors. And 2020 will be no different.

Although no longer the East Coast casino monopoly it once was, Atlantic City demonstrated its resiliency in the latter part of the past decade by reporting four consecutive years of total revenue growth. In 2019, the industry showed what it is capable of by eclipsing the $3 billion threshold in annual gaming revenue for the first time since 2012.

The gaming industry will be tested in 2020, with major regulatory rulings and potential market disrupters on the horizon, each with the ability to dull recent successes. Conversely, the yet-to-be-realized apex of sports betting and online gaming, combined with the ongoing diversification of the resort’s economy, inspires confidence in Atlantic City’s future.

Here are five storylines to watch in 2020.

1. Caesars/Eldorado merger

The multibillion-dollar merger of gaming giant Caesars Entertainment Corp. with lesser known Eldorado Resorts Inc. is expected to be finalized in 2020. Federal and state regulators still need to approve Eldorado’s $17.3 billion acquisition of Caesars, a merger that would result in the country’s largest gaming company with nearly 60 properties in 18 states.

In New Jersey, regulators will have to grapple with the question of whether the newly formed company would result in an undue economic concentration since it would control four of the nine operating Atlantic City casinos and hold deed restrictions on three other non-gambling hotels. In a joint petition submitted to the state Division of Gaming Enforcement last year, the gaming companies said an expert would be presenting evidence to suggest there would be no economic concentration.

Daniel Heneghan, an industry consultant and retired public information officer for the Casino Control Commission, said one area regulators will be looking at is operating efficiencies. Eldorado CEO Tom Reeg has already publicly stated the new gaming company — which will retain the Caesars name — is targeting nearly $500 million in “synergies” upon completion of the merger.

“Anytime you see mergers and consolidations within an industry, you get concerned about whether or not there will be contraction in terms of things like the number of employees,” Heneghan said. “It can be more profitable. And if it’s more profitable, how does that affect the people who work (there), the community in which (the company) operates and the overall industry itself?”

2. Sports betting + online gaming = $

The popularity of legalized sports betting and the continued growth of online gaming boosted the casino industry’s reported revenue last year. Combined, the two forms of gaming accounted for nearly 18% of the industry’s total through the first 11 months of 2019.

More than $4 billion was wagered on sports in New Jersey last year, generating more than $111 million in revenue and $13.7 million in taxes. Meanwhile, internet gaming revenues increased nearly 61% through the first 11 months of 2019 over the same period in 2018 and generated just shy of $433.4 million, according to state gaming regulators.

The interesting angle to watch in 2020 is the blossoming connection between the two. In its first full year of being regulated and legal in New Jersey, experts say sports betting helped grow internet gaming in 2019, particularly since more than 80% of all sports wagers in New Jersey were placed online. That trend is likely to continue.

“Six years in, and it’s clear that online casinos have been a win across the board in New Jersey,” said Eric Ramsey, online gaming analyst for PlayNJ. “Not only do online casinos continue to increase revenue at a breathtaking pace, they have built a symbiotic relationship with online sports betting. Online sportsbooks and casinos are helping to fuel each other’s growth.”

3. Regional competition

Atlantic City has shown itself to be vulnerable to regional competition. As gaming and tourism options continue to expand in nearby jurisdictions in 2020, Atlantic City, experts say, must be prepared.

“The uptick in revenue this past year from product diversification has helped to stabilize this fragile market temporarily,” said Bob Ambrose, an industry consultant and adjunct professor of casino management. “On the horizon for 2020, the economic-competitive pressures continue from an already oversaturated northeastern market.”

Ambrose pointed to Philadelphia, where the 2 million-square-foot LIVE! Hotel & Casino is expected to open in 2020, as just one example of how Atlantic City “will have another ‘notch’ carved into some of that coveted drive-in-market less than an hour away.”

Sports betting, which is legal in 20 states and Washington D.C., will also continue to expand, both at retail casinos and online. At least nine more states are expected to legalize sports betting in 2020, and a handful of others could do so the following year.

4. Diversification of industry

The push to diversify amenities and offerings for casino guests has been a focal point of the industry for several years because of the realization that gaming revenue alone cannot sustain the operations. Atlantic City has, slowly but surely, started to emulate Las Vegas, where nearly 70% of all revenue is generated from non-gaming amenities.

Rummy Pandit, executive director of the Lloyd D. Levenson Institute of Gaming, Hospitality and Tourism at Stockton University, said continued diversification of Atlantic City is critical to the resort’s long-term stability.

In the third quarter of 2019, Pandit noted that 47% of revenue was generated through non-gaming offerings, up from 27% for all of 2017.

“I anticipate that number is going to continue to grow as Atlantic City books more meetings and conventions and other leisure market segments continue to expand,” he said. “The product is constantly being refreshed by operators, creating a buzz about Atlantic City. That is further strengthening our position as a destination resort and helps to differentiate us from other locations.”

Recently, some of the casinos have even begun to embrace entertainment, dining and retail options outside their own walls in an effort to showcase the city. Hard Rock Hotel & Casino Atlantic City, Resorts Casino Hotel and Ocean Casino Resort have partnered with select businesses near their area of the Boardwalk to form a collaborative promotional effort called North Beach Atlantic City.

5. Public/private partnerships

Atlantic City remains under state control as a result of the 2016 takeover. And while the casino industry’s host municipality has made strides toward improving its fiscal situation, much remains to be done to further entice economic development.

Michael Pollock, managing director of Spectrum Gaming Group, said the ongoing presence of the state could be an opportunity for the city, and by extension the casino industry, to realize its full capability.

“Atlantic City’s potential, I equate to the horizon — it’s always out there, you never reach it, but it never goes away,” he said. “Hopefully, 2020 is going to be different than in previous years.”

Pollock said he envisions what he characterized as an “unprecedented public-private partnership” as a catalyst for realizing that potential. With the resources available from the state, such as tax incentives, combined with the will of private investors, Atlantic City can, once again, be the preeminent East Coast gaming destination, he said.

The Atlantic City Executive Council, a quasi-policy making body formed from a recommendation in the state’s transition report that includes both public and private stakeholders, has laid the groundwork. But, more could be done, Pollock said.

“You’ve got the mechanism, you’ve got the will and now you just need to identify the plans and put them into practice,” he said. “Atlantic City shouldn’t always be in a position where it hits bottom before it bounces back. Atlantic City should be ahead of the curve and use the gains it’s made from both internet gaming and sports betting to focus on getting a return on invested capital in the city itself.”

Contact: 609-272-7222

ddanzis@pressofac.com

Twitter @ACPressDanzis

Staff Writer

I cover Atlantic City government and the casino industry since joining The Press in early 2018. I formerly worked as a politics & government reporter for NJ Herald and received the First Amendment: Art Weissman Memorial NJPA Award two years in a row.

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