Casinos set to post banner year as revenues near $4B

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Atlantic City casinos could post one of their best years since the Great Recession at a time that industry leaders are seeking tax relief that they argue is vital to stave off future closures.

Data released on Dec. 16 by the state’s Division of Gaming Enforcement show that the state’s nine casinos generated revenue of more than $3.8 billion year-to-date as of November, from the combination of on-site retail, sports-betting and online gambling operations.

“Atlantic City’s total gaming revenue in 2021 is already the highest seen in twelve years and it is approaching $4 billion for the first time since 2008,” James Plousis, chairman of Casino Control Commission, said in a statement.

New Jersey’s gambling halls struggled during the COVID-19 pandemic. They all had to shut down  between March and July 2020, relying solely on internet and mobile phone products.

The latest data show total gaming revenue for all nine casinos was $362.3 million in November – 38.9% higher than the same month last year and, according to the CCC, 25.5% higher than November 2019.

Online revenue was $118 million in November and $1.23 billion since January, while retail revenue was $206.9 million last month and $2.3 billion since January, according to NJDGE figures.

November marked the third consecutive month that patrons wagered more than $1 billion, with $1.26 billion bet – mostly online. Year-to-date, patrons have wagered $9.7 billion and casinos took in $756.7 million.

Nonetheless, lawmakers are fast-tracking a series of proposed tax breaks for the state’s nine casinos. Those measures are up for a vote in both the Assembly and state Senate on Dec. 20.

The main proposal would reduce the annual remittances that casinos make to Atlantic City in place of property taxes, known as a Payment of Lieu of Taxes or PILOT arrangement. Those funds go to Atlantic City, Atlantic County and the local school district, and would be reduced by $55 million in 2022, and between $30 million and $65 million annually through 2026 according to legislative estimates.

Assembly Bill 5587 would also remove online gambling and sports betting revenue from the tax calculations, at a time when both channels have posted record activity. Under the original PILOT agreement which is still in effect, the Atlantic City casinos are on the hook for a combined $165 million this year.

Opponents and local officials like former Atlantic City Mayor and incoming state Assemblyman Don Guardian characterized the proposal as another bailout for the casinos without any actual need on their part.

Senate President Stephen Sweeney, D-3rd District – the bill’s main sponsor – warned that without this state relief, as many as four casinos could go under, a dire prospect for a city that neared financial ruin in 2016 after the closure of five casinos coming out of the Great Recession, prompting the state takeover that year.

And the proposal has been backed by the state’s casino industry.

Joe Lupo, president of both Hard Rock Atlantic City and the trade group the Casino Association of New Jersey, maintained that while the numbers were impressive, most of it was from online gambling where the profits are split among dozens of internet operators including FanDuel and DraftKings, even though the dollars are reported as profits of one of the nine casinos.

That reason alone was justification to remove internet gambling from how the PILOT payments are calculated, he said in an interview.

Retail revenue dipped more than 8% from nearly $224 million in November 2019 to $206.8 million last month, indicating “it’s actually gone backward,” Lupo said. By November 2019, the casinos’ brick and mortar operations had generated in $2.47 billion, 5.7% more than int the first 11 months of 2021.

While October 2021 retail numbers were up from that same month in 2019, the fear is that the pandemic will keep people away from the brick-and-mortar casinos.

Jane Bokunewicz, faculty director of the Lloyd D. Levenson Institute of Gaming, Hospitality and Tourism at Stockton University – a think tank just outside of Atlantic City – agreed, nothing that the spike in COVID-19 cases means a “decline in revenue in November is not entirely unexpected.”

“Overall, New Jersey’s gaming operators have managed a respectable recovery, putting up record total gaming revenue numbers through innovation and adaptation in implementing non-traditional gaming products,” she continued.

Another measure, Assembly Bill 5943, would temporarily modify some of the taxes and credits for casinos licenses, and change the state’s promotional gaming credits to include coupons and table game wagers.