Revenue up, profits down in Q1 gaming numbers

The state Division of Gaming Enforcement released its 2023 first quarter figures May 22, showing stronger net revenue numbers but a dip in profitability over the last year as casino operators deal with continued inflation, higher labor costs, and more.

New Jersey’s nine casinos reported Q1 net revenue of $756.6 million, a 4.6% increase over the first quarter of last year, along with a gross operating profit of $135.4 million, a 14.8% decrease versus 2022.

“Strong gross gaming revenue (GGR) does not always translate into strong net revenue or gross operating profits (GOP),” 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. “But in this instance, near-term record GGR in January, February, and March resulted in a new high for first-quarter net revenue – surpassing the previous record ($723.2 million) from last year. At $135 million, GOP for the period did not exceed first quarter 2022 ($159 million), but easily outperformed 2021 ($95.5 million) and 2019 ($85.7 million).”

“Results from the first quarter show Atlantic City’s operators have successfully grown the size of the market compared to the same period last year as well as compared to pre-pandemic periods,” said New Jersey Casino Control Commission (NJCCC) Chairman James Plousis in his remarks about the first quarter figures. “Net revenue reached its highest level for the first quarter in five years.”

Plousis says the profit results were mixed due to higher costs.

“Compared to the first quarter last year, the casino hotels are employing more people and a progressive labor agreement was reached,” Plousis explained. “These steps are emblematic of an industry that is preparing for growth and success.”

Bally’s saw the greatest percentage increase in GOP from last year to this year, turning a $6.8 million GOP loss in Q1 of 2022 into a small profit of $88,000, a 101.3% jump. It was followed by Ocean Casino Resort, which saw a 27.6% increase in GOP from 2022 ($18.5 million) to 2023 ($23.6 million); and Harrah’s which reported a 21.2% jump in GOP from last year ($15.9 million) to this year ($19.3 million).

Hotel occupancy was 65.2%, an increase of 2.1% over the first quarter of 2022.

Results from the first quarter show Atlantic City’s operators have successfully grown the size of the market compared to the same period last year as well as compared to pre-pandemic periods.
— James Plousis, chairman, New Jersey Casino Control Commission (NJCCC) 

On the flip side, Resorts saw the biggest percentage dip in GOP from last year ($527,000) to this year (-$284,000), a 153.9% fall. That was followed by Borgata, which saw a 50.3% drop from 2022 ($45.9 million) to 2023 ($22.8 million); and Hard Rock, which had a profit drop of 17.5% from last year ($26.9 million) to this year ($22.2 million).

“If first quarter, net-revenue performance gives us a first look at the upcoming tourism season, then we should expect to see continued efforts from operators as they seek to find their stride in managing the resurgence in consumer demand, the lingering labor shortage and the higher cost of labor – all of which are likely to impact the revenue/expense balance of the industry in the coming months,” said Bokunewicz.

“One theme of last month’s East Coast Gaming Congress was the importance of coupling online gaming with high-quality in-person resort experiences,” said Plousis. “This off-season, the casino hotels have dedicated a large amount of capital to improve their properties. Atlantic City’s well-conceived investments will bolster visitation and position the resort for a strong summer.”