Q1 Gambling Revenues Drop 15% in New Jersey

The New Jersey Division of Gaming Enforcement has released the recent revenue reports for Atlantic City casinos, giving insight into the first quarter earnings of the area. For the period running January to March, the industry generated just over $135 million. This is a decrease in earnings of around 15% from the $159 million earned in 2022. The gross revenue reports are based on earnings before taxes are paid and interest, depreciation, and other fees.

The drop in revenues is quite large and a bit unexpected. We know that the industry has been dealing which higher costs, so that will cut down on earnings considerably. Higher wages are being paid to employees due to contract deals signed last year, which also plays a role in earnings totals.

Compared to the first quarter in 2022, the NJ casinos are paying more for wages and employing more people. It may be at a cost to the casinos, but it is a sign that the area is seeing growth and major success.

Lower earnings are also being attributed to inflation. For the past few years, the cost of living has increased. Materials, food, drinks, etc, are higher costs for businesses. The casino operators are paying more for what they need, and people are not traveling as much or for as long due to the rising cost of living in today’s economy. This plays a role as well in how the industry fares.

Per casino, there were major losses seen for the quarter. Bally’s took a big hit last year with a loss of $6.8 million; this year, it only earned $88,000. Of course, the difference is staggering from year to year, and at least the brand didn’t experience another huge loss this go-round.

Resorts was down, losing $284,000 in Q1, with Borgata Casino also seeing a loss of $22.8 million. This was a 50% drop for the company. Hard Rock and Tropicana were both down, dropping 17.5% and 15.3%, respectively. Hard Rock earned only $22 million, and Tropicana came in at over $16 million. Golden Nugget was also down, dropping just over $1 million for the year.

On the upside, Ocean Casino, Harrah’s, and Caesars saw an increase in earnings for the quarter. Ocean earned $23.6 million, an increase of over 27%. Harrah’s was up over 21% with $19.2 million in earnings. Caesars was up over 7% with just over $11 million in revenues.

For online-only companies, the results were mixed. Resorts Digital brought in almost 6% more this quarter, generating almost $8 million. Caesars Interactive Entertainment NJ was able to bring in $6.8 million, a decrease of 13.2%.

The latest figures come at a time when analysts are showing concern about room occupancy rates and in-person gambling winnings. The occupancy rate was up for the first quarter, increasing by over 65%. This is a more than 2% increase from 2022. Ocean Casino averaged the highest room rate at $212, while Golden Nugget had the lowest cost at $113.

Casinos need to see a high room occupancy rate on a steady basis to keep bringing in higher revenue amounts. Overnight stays result in casino spending, along with dining, drinks, and entertainment.

At the same time, analysts are concerned about in-person gambling win for the casinos. Overall, gambling revenues are high but are being pushed by sports betting and online casino earnings. If you remove the online element, the revenues for the physical casinos drops.

In April, the state saw a 9.5% YOY increase but remove the online earnings, and the casino totals fall by over 1%.