Striking the right balance
ATLANTIC CITY — Even before Hard Rock Hotel & Casino and Ocean Resort Casino opened in late June, some wondered whether the Atlantic City market could handle more internal competition.
And while the city’s gaming industry is riding a positive wave from the new gambling halls and the introduction of legalized sports betting, even the casino executives are acutely aware that the market may not be big enough for all of them.
“If we don’t grow the market, there’s probably not going to be nine properties,” said Joe Lupo, president of Hard Rock and a former executive at Borgata Hotel Casino & Spa, during a recent business forum hosted by the Greater Atlantic City Chamber.
After five casinos closed between 2014 and 2016, bringing the total number in the resort to seven, the prevailing thought was that the market had “rightsized” itself as total gaming revenue began to marginally increase for the remaining properties.
Casino win (revenue from table and slot games), however, continued to decrease until 2017, when it rose to $2.413 billion from 2016’s $2.406 billion.
In 2018, with nine properties up and running, casino win was $2.5 billion.
But gaming experts believe focusing on the number of properties, rather than the size of the market and how best to foster growth, is missing the big picture.
Michael Pollock, managing director of Spectrum Gaming Group, said the number of casinos in Atlantic City is “absolutely irrelevant” to the sustained viability of the market. He said attention should be placed on ways to increase visitation, value and experiences, all of which would boost profitability for the market.
“The number of properties is not even remotely the critical measure,” said Pollock.
The question of how many casinos is the “right” number for Atlantic City was posed to five executives representing seven of the resort’s nine properties during the chamber event. The forum took place the same day that news broke of an ownership change at Ocean Resort.
The executives from Borgata Hotel Casino & Spa, Hard Rock, Resorts Casino Hotel, Tropicana Atlantic City and Caesars Entertainment Corp.’s three properties (Bally’s, Caesars and Harrah’s Resort) all said the current number was either just right or perhaps slightly over what the market could reasonably handle.
The executives were afforded an opportunity to get to the heart of the matter: How can the Atlantic City market grow?
Outside of the expected answers of offering better service and product or more non-gaming amenities, the executives touched on many of the same elements that industry experts believe are essential to growing the overall market: ease of access, leadership stability and improving both the perception and reality of the city.
“I think a big part of what we have to solve is how can we incorporate more convenient means to get into our market,” said Marcus Glover, president and chief operating officer of Borgata, “and bring the airport to life.”
Increasing air travel to Atlantic City has been a focal point of former Atlantic City and Las Vegas casino executive Steve Norton for years. Norton, now an industry consultant, has long maintained that increasing midweek, offseason visitation to the resort, primarily through more convention bookings, is paramount for Atlantic City.
“But to be successful at attracting the convention trades, Atlantic City needs commercial air service into Atlantic City International (Airport), because this is the favorite method of transportation for attendees at the larger shows,” Norton said. “Plus new air would also allow Atlantic City to attract casino players and vacationers from cities like Atlanta, Dallas and Houston that have populations similar to Philadelphia, but no casino gaming.”
Kevin Ortzman, president of the Casino Association of New Jersey and regional president of Caesars Entertainment, cited political instability as a challenge. While he did not elaborate on that idea, the continued state oversight of Atlantic City and the uncertainty of that complicated dynamic has been a concern for many in the industry.
The final point, which all of the casino executives at the forum and most industry experts agree is critical to expanding the market, is changing the image of Atlantic City. Mark Giannantonio, president and CEO of Resorts, said point blank: “Perception is reality.” Glover said Atlantic City needs to figure out how to “not be in the crosshairs” of negative attention.
“We have social issues in Atlantic City,” said Steve Callender, senior vice president of Eastern regional operations for Tropicana Atlantic City’s parent company, Eldorado Resorts. “It’s not a great situation, and it needs to be addressed. It hurts our businesses, and it frightens our customers.”
Pollock said Atlantic City has always risen and fallen with the resort’s image.
“The history of Atlantic City is one that perceived reality becomes reality,” he said. “Atlantic City needs to focus on changing perception for investors and visitors to want to come.”