Second quarter numbers show mixed bag for casinos

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Second quarter figures released Aug. 22 by the state Division of Gaming Enforcement reveal an uneven performance with some casinos doing well and others lagging behind as the industry adapts to the new normal created by the pandemic.

Casino operators reported net revenue of $828.8 million last quarter, which reflects a 14.1% increase over the same quarter in 2021 with a gross operating profit of $183.6 million, was slightly less than the $185.2 million for the year-ago period.

Jane Bokunewicz, director of the Lloyd Levenson Institute of Gaming, Hospitality, and Tourism at Stockton University, said that while the gross operating profit slipped from 2021, it exceeded 2019, showing that casino operators are continuing to leverage lessons learned during the pandemic to balance expenses with consumer demand.

“Amid uncertainties in the market – from the continued influence of public health concerns to inflation and raised fuel prices – the industry as a whole has learned to adapt and operate profitably,” said Bokunewicz.

The top second quarter performers by profit were Borgata ($42.2 million), Hard Rock ($38 million), and Tropicana ($30.3 million). Hard Rock saw the biggest jump from last year at 45.9% while Caesars (-23.6%), Resorts (-15.1%), and Golden Nugget (-14.7%) saw the biggest percentage profit drop the second quarter of 2021.

“The second quarter 2022 performance of the casino industry is indicative of the myriad of challenges faced by the industry as it recovers after many months of suppressed economic activity due to COVID-19 and lingering public health and economic concerns,” Bokunewicz explained. “Despite the volatility of the spring, July’s rebound, as demonstrated in the most recent monthly numbers from the DGE, is evidence of the industry’s resilience and the skill of operators to adapt to and manage uncertainty in the market.”

Last quarter, the average occupancy rate for the casino hotels was 77.4%, which is 7.4% higher than last year’s second quarter. Hard Rock (95.1%), Ocean Resort (91.4%), Caesars (84.4%) topped the list of hotels with the highest occupancy rate.

Bokunewicz noted the non-gaming revenue figure of $373 million, including lodging, food & beverage, entertainment, and other sources, which accounted for 45.5% of total revenue for the quarter. That percentage is a big jump from last year (39%) and just below pre-pandemic figure of 46% in 2019. The trend is a positive one for operators, especially those who bet big on development and nongaming revenue streams.

“This demonstrates a return to pre-pandemic behaviors for in-person casino patrons and further supports operators’ recent capital improvement investments,” said Bokunewicz. “These nongaming amenities, as well as the gaming ones, diversify the casino product in Atlantic City and the region. And, by offering a quality and distinctive experience both in-person and online, Atlantic City’s casino operators can remain competitive in a rapidly evolving market.”