The Division of Gaming Enforcement (DGE) released its third quarter and year-to-date report Nov. 22, for the quarter ending Sept. 30.

“For the third consecutive year, Atlantic City’s net revenue exceeded $2.5 billion in the first nine months of the calendar,” said New Jersey Casino Control Commission Chairman James Plousis. “Atlantic City casinos reported $242.9 million in gross operating profit during the third quarter. Every casino was profitable in both the third quarter and year-to-date.”

That’s some of the positive trends in the report, but there were concerning developments as well.

“At the same time, pressure from continuing high costs can be seen in lower profits compared to the same period last year,” Plousis noted.

“Consumer demand may have been an issue for Atlantic City’s casino operators in Summer 2024,” said Jane Bokunewicz, faculty director of the Lloyd D. Levenson Institute of Gaming, Hospitality, and Tourism (LIGHT), Stockton University School of Business, in her analysis of the report.

Report toplines include (year-over-year trends in parentheses):

• Casino net revenue for Q3: $943.2 million (down 2.9%)
  • Top performing casinos:
    • Borgata – $218.4 million (flat)
    • Hard Rock – $165.9 million (down 2.2%)
    • Ocean Resort – $146.9 million (down 1.5%)
• Casino net revenue for first nine months of 2024: $2.54 billion (down 0.2%)
  • Top performing casinos:
    • Borgata – $592.9 million (down 0.4%)
    • Hard Rock – $455.8 million (up 5.4%)
    • Ocean Resort $377.3 million (up 1.4%)
• Gross operating profit for Q3: $242.9 million (down 13.6%)
  • top performing casinos:
    • Borgata – $60.4 million (down 17.8%)
    • Hard Rock – $45.4 million (up 2.4%)
    • Ocean Resort – $36.5 million (down 15.3%)
• Gross operating profit for the first nine months of 2024: $576.6 million (down 8.8%);
  • top performing casinos:
    • Borgata – $166.5 million (down 6.5%)
    • Hard Rock – $107.1 million (up 10.4%)
    • Ocean Resort – $76.4 million (down 15.7%)
• Hotel occupancy rate for Q3: 84.1% (down 1.5%)
  • Average rate per occupied room – $201.08
  • Top performing casinos, with average occupied room rate:
    • Hard Rock – 95.1% | $222
    • Ocean Resort – 92.6% | $335.63
    • Caesars – 91.3% | $217.89
• Hotel occupancy rate for the first nine months of 2024: 74.1% (down 1.1%)
  • Average rate per occupied room – $182.97
  • Top performing casinos, with average occupied room rate:
    • Hard Rock – 89.3% | $186.82
    • Caesars – 83.5% | $189.81
    • Ocean Resort – 83% | $280.76

Reduced revenue, increased expenses

“Although occupancy rates compared well to previous third quarters (85.61% and 86.66% in 2023 and 2022, respectively), average daily room rate dropped by almost $17 this summer ($201.08 in third quarter 2024 compared to $217.70 in Q3 2023 and $216.55 in Q3 2022), indicating that operators may have needed to drop their average daily room rates to attract patrons,” said Bokunewicz. “It is possible that the lack of annual large-scale events such as the Atlantic City Airshow and beach concert series may have contributed to this struggle.”

Bokunewicz noted that in addition to the dropping average daily room rates, operators likely also increased their spending on promotions.

“According to the quarterly financial reports of the individual properties, operators spent a total $423 million in promotional allowances and $38.3 million in promotional expenses in third quarter 2024,” she explained. “This was more than 18% higher in allowances and nearly 2% higher in expenses than third quarter 2023 ($399.8 million in allowances, $34.1 million in expenses) and nearly 6% higher in allowances and more than 12% higher in expenses pre-pandemic 2019 ($357.8 million in allowances, $37.7 million in expenses).”

Bokunewicz said nongaming revenues did not perform well in Q3 versus past years – which she said are historically strongest in the peak summer months, which the quarter covers.

“At $511.6 million, nongaming revenue for the period fell 5% short of the same period in 2023 ($538.28 million), despite exceeding third quarter 2019 ($438.53 million) by 16.7%,” Bokunewicz continued. “With this reduced revenue and increased expenses (both in promotion and general operating costs), it is no surprise that gross operating profit for the period also declined.”

While the year-to-date total net revenues were flat from last year, Bokunewicz said it was not enough to prevent further decline in gross operating profit.

“At the end of the second quarter, operators reported a nearly 5% decline in year-over-year gross operating profit – this gap has grown to nearly 9% as of the end of the third quarter,” she closed her analysis.

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