Revenue up, profits down in year-end Garden State gaming numbers

Matthew Fazelpoor//April 11, 2023//

The Atlantic City skyline highlights several casinos. - MEET AC/VISIT ATLANTIC CITY

Matthew Fazelpoor//April 11, 2023//

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The state Division of Gaming Enforcement released its year-end 2022 gaming numbers April 10 showing that while total net revenue rose, gross operating profit (GOP) dipped last year as casinos faced a number of challenges, including higher operating costs.

Net revenue for casino operators reached $3.3 billion in 2022, a 9.3% increase from 2021 ($3.02 billion). Meanwhile, casinos reported a GOP of $731.3 million, a 4.6% decrease versus 2021 ($766.9 million).

“Although total net revenue exceeded 2021 totals and surpassed pre-pandemic 2019 total net revenue ($3.16 billion) for the first time, it was not enough to exceed gross operating profit year over year,” said Jane Bokunewicz, faculty director of the Lloyd D. Levenson Institute of Gaming, Hospitality, and Tourism (LIGHT), Stockton University School of Business, who analyzed the report. “Despite realizing higher GOP in 2022 than 2019 ($613.5 million), the year ended with a disappointing decline of nearly 5% GOP compared to 2021.”

Bokunewicz stressed that increased local competition and lost earning potential in 2020 combined to make 2022 a uniquely challenging year for several of Atlantic City’s casino operators.

How they fared

Borgata Hotel Casino & Spa led the way in 2022 net revenue at $759.7 million, a 21.6% increase over 2021. But its gross operating profit ($140.3 million) was down 19.4% from 2021 ($174.1 million).

Hard Rock Hotel & Casino Atlantic City saw growth in both metrics, continuing its momentum in the Atlantic City market, with a net revenue of $598.5 million for a 17.6% increase over 2021 ($508.9 million), and a GOP of $128 million, marking a 19.8% increase over 2021 ($106.8 million).

Ocean Casino Resort reported a strong 2022, as well, with net revenue of $423.1 million, a 20.2% increase over 2021 ($351.9 million), and a 2022 GOP of $96.2 million, a 5.5% increase over 2021 ($91.3 million).

Bally’s Atlantic City Casino Resort posted a strong showing, with net revenue last year of $171.4 million for a 22.5% increase over 2021 ($139.9 million). And while its gross operating profit was in the red, losing $1.9 million in 2022, that marked an 85.7% jump from 2021 when Bally’s lost $13.2 million.

The biggest percentage drop in net revenue was reported by Tropicana Atlantic City with $304.3 million in 2022, marking a 6.9% loss from 2021 ($326.9 million).

The biggest percentage dip in GOP was reported by Resorts Casino Hotel with $21 million in 2022, a 23.9% decrease from 2021 ($27.6 million).

Hard Rock Atlantic City — The occupancy rate for Atlantic City casinos last year was 73.4% — an increase of 5.8% over 2021, with Hard Rock (88.6%), Ocean Resort (85.5%), and Caesars (81%) leading the way. – AARON HOUSTON

“Anecdotally, operators have increased spending on marketing and promotional efforts to draw in consumers and remain competitive in the market,” said Bokunewicz. “Increases in wages for the industry workforce also likely contributed to higher operating costs leading to lower GOP at year end.”

She also noted that with the industry-wide gains in revenue – especially those generated by internet gaming, which is taxed at a higher rate – the industry has generated record-high total gaming tax revenue in the last two years.

“Combined tax revenue generated from an 8% tax on casino gross revenue, a 15% tax on internet gaming gross revenue, an 8.5% tax on casino retail sports wagering gross revenue, and a 13% tax on casino internet sports wagering gross revenue resulted in $467 million in 2022,” said Bokunewicz. “That is a nearly 12% increase over the industry’s last peak at $417.5 million in 2006 – before the launch of online and sports wagering.”

One other notable stat in the report was the occupancy rate for Atlantic City casinos last year, which was 73.4%—an increase of 5.8% over 2021, with Hard Rock (88.6%), Ocean Resort (85.5%), and Caesars (81%) leading the way.

As NJBIZ has extensively reported, there are a slew of exciting non-gaming projects set to open this year in Atlantic City, which operators and city officials hope will lead to more people visiting the seaside resort town.