Nearly three decades ago, the largest and most lucrative gaming jurisdiction in the United States collectively shifted its focus from gambling profits to revenue generated elsewhere in casino hotels.

But, while resorts on the Las Vegas Strip ensured their long-term viability by creating a sustainable model under which the majority of their revenue came from hotel rooms, food and beverage sales, unique experiences, concerts, shows and retail, the country’s second-largest gaming market stood by and watched, seemingly content with its East Coast casino monopoly.

Now, many experts and industry officials believe Atlantic City needs to emulate the successful model from Las Vegas to not only thrive but survive the continued encroachment of nearby gaming jurisdictions.

“Since the inception of casino gaming in Atlantic City, the revenue mix for the city’s operations have weighed heavily on the side of gaming revenue,” said Rummy Pandit, executive director of the Lloyd D. Levenson Institute of Gaming, Hospitality and Tourism at Stockton University. “While this gaming-centric revenue model was successful for decades, when Atlantic City was ‘the only game in town,’ recent increases in regional competition for gaming dollars have challenged this approach. In high-density markets like Las Vegas, Nevada, casino properties have distinguished themselves from competitors and created sustainable revenue through embracing an integrated resort or ‘nongaming revenue model.’”

Beginning in 1989, casino properties in Vegas started focusing on convention and expo business, which drew the coveted midweek, multiday hotel guest. That year, gaming revenue accounted for just under 59 percent for all the Vegas Strip casino properties, according to data collected by the Center for Gaming Research at the University of Nevada, Las Vegas. Ten years later, gaming revenue accounted for 48 percent. In 2009, less than 39 percent of revenue was from gaming, and last year the figure was 34 percent across the Strip’s 24 properties.

“In order to succeed, more Atlantic City properties need to invest in nongaming amenities that will give visitors reasons besides gambling for visiting,” said David G. Schwartz, director of the Center for Gaming Research at UNLV. “This will build the critical mass that is needed for visitors to plan multiday trips, rather than just daytrips.”

Steve Norton, an industry consultant who worked as a casino executive in both Atlantic City and Las Vegas, was at the Las Vegas Sands in 1990 when the industry focus shifted to nongaming. He said that once Vegas fully embraced the idea of becoming a convention and expo destination, the city supplanted Chicago as the No. 1 location in the country, a distinction it has held nearly every year since.

Norton said that while he was an executive in Atlantic City and was simultaneously serving as chairman of the Convention and Visitors Bureau, he “tried like hell” to get casino operators in the resort to go after convention business.

“The properties said they didn’t need it” at the time, said Norton.

Schwartz said that while some Atlantic City properties made incremental changes toward more nongaming revenue “it hasn’t been adopted universally as it was in Las Vegas.”

“The failure of Revel (Casino Hotel after only two years of operation) — which was a property that would have fit right in on the Las Vegas Strip — made it that much more difficult to argue that nongaming could be the core of an Atlantic City casino,” he said.

But in recent years, the Atlantic City casino industry has begun making changes to diversify and expand its nongaming offerings.

Kevin Ortzman, president of the Casino Association of New Jersey and regional president of Caesars Entertainment Corp.’s three Atlantic City properties, said comparisons to Vegas are “much less appropriate” than they appear. Ease of access, the customer base, length of stay and the number of hotel rooms were just a few areas where Sin City and the World’s Playground differed, he said. The Atlantic City casino industry has invested hundreds of millions of dollars in recent years toward nongaming amenities, Ortzman said, pointing to projects such as Harrah’s Waterfront Conference Center, Borgata’s Festival Park and Tropicana’s expansion of The Quarter, as well as the millions invested in noncasino projects throughout the city.

“Atlantic City has greatly increased its nongaming amenities in response to a changing market,” said Ortzman. “In fact, for over a decade, the Atlantic City casino industry has worked to solidify the seaside resort’s comeback by diversifying Atlantic City’s offerings, as well as investing hundreds of millions of dollars in redevelopment projects and nongaming services to attract new visitors. During that period, the casino industry has been and continues to be focused on transforming Atlantic City from a predominantly gaming location to a diverse beachfront destination, where gambling is just one of the many activities bringing visitors to this great city each day.”

In 2000, gaming revenue accounted for nearly 82 percent at the resort’s 12 casino properties. In 2017, the average gaming revenue generated by Atlantic City’s seven casinos was 73 percent before promotional deductions. Through September of this year, with nine casinos operational for nearly six months, the average gaming versus nongaming revenue generation was 57 percent versus 43 percent, according to data from the Levenson Institute.

“This shift, especially considering continued increases in gaming revenue itself, is evidence that the industry’s investment in nongaming offerings is being well received by visitors to the city and therefore will likely continue into the future,” said Ortzman.

The city’s two newest properties, Hard Rock Hotel & Casino Atlantic City and Ocean Resort Casino, have already set a precedent for how they will operate in the market. The two casinos, which both opened June 27, average 45 percent of their revenue from casino gaming and 55 percent from nongaming. Pandit said the difference in the revenue share was “indicative of the properties’ individual revenue models and target audiences.”

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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