Holding the line

Going into 2020, the deck was hot for New Jersey’s nine casinos, three racetracks and dozens of online gambling and sports-betting outlets. Then COVID-19 closed the gaming halls for more than three months. Now, they’re limited to 25% capacity. Meanwhile, restrictions on indoor dining and indoor gatherings have eaten into revenues. Gov. Phil Murphy has maintained the restrictions, even if not tightened, will not be loosened any time in the near future.

Consumer anxiety over being at a casino, convention or business conference and potentially catching COVID-19 has kept many people out of brick-and-mortar establishments. And widespread unemployment has led many New Jerseyans and out-of-state visitors to simply tighten their belts.

The numbers have reflected that reality: online gaming has flourished as most patrons shelter at home, casino winnings and ancillary economic activity – shopping, entertainment, dining and hotel stays – have all fallen off dramatically.

Projections from state health officials suggest the worst of the second wave will run its course through the start of February. After that, numbers like daily new cases and total hospitalizations will plateau and then gradually decline over the next several months.

Running parallel to that, the state is aiming to vaccinate 70% of New Jersey adults within a six-month period, meaning the region would build a herd immunity that would deprive the virus of any new hosts. Limitations on businesses will gradually be loosened.

“When the restrictions are pulled away and the vaccine takes hold, I’m hoping next summer will be encouraging,” Joe Lupo, president of Hard Rock Hotel and Casino Atlantic City, said in an interview. “But it’s probably 2022 that we really see numbers start to [grow].”

The prohibition on indoor dining between 10 p.m. and 5 a.m. has worsened the results for New Jersey’s casinos during the second wave.

“Our prime time from 10 p.m. to 1 a.m. is not so much a prime time anymore,” Lupo continued. “So visitation has changed and obviously these came down at a time of the year –    these restrictions – when things are slowing down. Outdoor dining isn’t accessible.”

The real moneymakers over the winter are the conferences and conventions, which can draw tens of thousands of visitors, according to Larry Sieg, president of Meet AC, which handles event booking, sales and marketing for the 500,000-square-foot Atlantic City Convention Center.

And Max Bichsel, vice president of U.S. business at the Gambling.com group, noted in the fall that the loss of business travel for Atlantic City – which has one of the biggest concentrations of conference and hotel space in the Mid-Atlantic Region – has blown a hole in the local economy.

Between January and November 2019, the casinos won $433.4 million through online gambling and $3.3 billion through online and mobile sports betting, according to figures released in December by the New Jersey Division of Gaming Enforcement. Those numbers soared in those same 11 months of 2020, with casinos winning $870.9 million through online gambling and $4.6 billion through remote sports betting.

Between January and November of 2019, the casinos won $2.5 billion on their floors, compared to $1.4 billion during those 11 months in 2020. In all, that 11-month period in 2019 brought in over $3 billion for the casinos, compared to $2.3 billion in 2020.

“As progress is made in combatting the virus and a vaccine is distributed, we have every reason to feel optimistic about the year ahead,” said Steve Callender, regional president for Caesars Entertainment, which owns Caesars, Tropicana and Harrah’s Resort in the seaside resort town. “Before the pandemic, Atlantic City casinos had an impressive 21 consecutive months of revenue growth and New Jersey’s sportsbooks surpassed Nevada’s for the first time.”

New Jersey’s sportsbooks are nearing the very likely scenario that in a single month – most likely in early 2021 – patrons could wager more than $1 billion, most of it through online and mobile apps because of the pandemic.

And the resumption of many sports that were delayed or cancelled in 2020 – like the Summer Olympics, the NCAA basketball tournament and many professional leagues – all mean customers could make up for lost time this next year.

“New Jersey remains a big reason for our tremendous growth success,” said Kevin Hennessy, a spokesperson for FanDuel, in a statement. “The FanDuel Sportsbook at Meadowlands Racing Entertainment continues to be our largest retail sportsbook and the gold standard for retail sportsbooks in the U.S.” The unveiling of a new retail sportsbook for Bally’s Atlantic City Hotel and Casino is also promising news, Hennessy added.

Online gambling and sports betting helped the casinos survive during the pandemic, the closures during the first wave and tightened business restrictions. And they remain just that, according to Jane Bokunewicz, coordinator, the Lloyd D. Levenson Institute of Gaming, Hospitality and Tourism at Stockton University.

“Internet gaming is a lifeline for casino revenue and the higher taxes internet gaming provides to the state, but it should not be considered a replacement for revenue generated by visitation to brick-and-mortar casinos,” she said in an email.

“Meetings, conventions, live entertainment and special events fill casino hotel rooms and increase traffic on the casino floor and in non-gaming spaces,” especially during weekdays and the off-season, Bokunewicz added. “These large events are booked months in advance, however, so there will be a lag time before normal business volumes return. The sooner the casinos can resume planning and booking these events the better chance they have for a rapid recovery, and the better it will serve the overall economy by getting more people back to work.”

Bally’s officials largely agreed that online gaming is not a substitute for crowded hotels, casinos and restaurants. Marc Crisafulli, an executive vice president at Bally’s, said they instead “complement our brick-and-mortar operations,” which “remain foundational to our success. … As such, we will continue to focus on and invest in both segments of our business,” he said in an email.

Many other casino executives agreed with the sentiment that in-person amenities will be critical to their establishments’ success in 2021 and beyond. Mark Giannantonio, president and chief executive officer of Resorts Casino Hotel, said those amenities – dining, entertainment, and indoor gatherings – allow their establishment to “attract a broader market of customers.”

“Resorts has consistently cross-marketed to the bricks-and-mortar and online gaming customers to ensure each segment of our business has access to both gaming experiences. These cross-marketing efforts will continue going forward.”

Lupo said that the explosion in online gambling has allowed Hard Rock to build up its database of patrons to which they can market new in-person amenities, once they avail themselves in the upcoming months.

“I think online will continue to grow. I think you’ll see land-based volumes come back by those who either like to socialize, slot machine or table games; online will just simply continue to grow.”