Winter is coming

It’s been a full quarter since New Jersey’s brick and mortar gaming parlors were allowed to reopen for business and while data from the New Jersey Division of Gaming Enforcement will not come out for several weeks on how the casinos fared between July and September, several trends are evident. For one, online gaming is king in Atlantic City. Patrons wagered a record $602 million at the state’s online sportsbooks in August alone. They bet half of that a year ago, according to NJDGE data: $249.2 million on the online sportsbooks in August 2019.

And the number of online wagers, and winnings for the casinos, skyrocketed once the pandemic hit New Jersey, forcing the closure of all nine casinos on March 16 and leading to triple-digit losses.

Between January and August 2020, casinos won $598 million from online gaming, a more than 100% spike from the $297.8 million the casinos won during the first eight months of 2019.

“All the online gaming numbers have been growing exponentially over the past several months, because people have been cooped up in their homes,” said Max Bichsel, vice president of U.S. business at the Gambling.com group. “It’s not necessarily the most surprising, but the most positive.”

But the potentially sluggish rebound since the casinos were allowed to reopen just before the July Fourth weekend remains a concern for the industry. Capacity was limited to 25% and bars, nightclubs and entertainment venues remain off limits for the foreseeable future. Indoor dining was absent for the first two months.

“For the time being, we are focused on gaming, food and hotel. We look forward to the day when we can safely reintroduce the other amenities our property has come to be known for,” said Tim Louie, a spokesperson for Ocean Resort Casino, which opened in June 2018 along with Hard Rock Hotel and Casino Atlantic City.

“Our plan is to continue to build upon the momentum we created pre-pandemic.”

All nine of the casinos have yet to fully rebound over the course of July and August, or mainly just August in the case of the Borgata Hotel Casino and Spa, which was the last to reopen, resuming operations on July 26.

Dustin Gouker, an analyst for the gaming website PlayNJ.com, said the picture for the casinos is not all bleak. He pointed to the total gaming revenue in August 2019 and August 2020 – $326.3 million and $352.7 million respectively – which show how much money these establishments won on their physical casino floors and online market.

“The total gaming revenue in Atlantic City was only down 7 percent in August” compared to last year, “which is kind of crazy considering their limited capacity for physical casinos,” Gouker said.

The bulk of the drop in July and August revenue was more a mathematical problem than an actual issue with the casino’s bottom line, according to Jane Bokunewicz, coordinator at the Lloyd D. Levenson Institute for Gaming, Hospitality and Tourism at Stockton University in nearby Galloway Township.

“A lot of the total number was because of Borgata, because they weren’t open in July,” she said. “If you took Borgata out of the equation and just compared the eight casinos, then they were up 14 percent in August from July.”

The resumption of indoor dining on Sept. 4, also at 25% capacity, means the casinos could see other traditional measures distorted, such as a typical trail-off in casino visitation when day-trippers stop visiting the seaside town as beach season wanes. “It’ll be interesting to see if September goes up again over August,” Bokunewicz said. “Usually September goes down, but they did allow indoor dining at the beginning of September.”

Revenue at every casino fell sharply during the three months they were forced to stay closed. Gaming profits dropped, and money from hotel rooms, food and beverage at best flat lined. “I think it’s more about survival. It’s not about ‘do we do well’ it’s about ‘do we make enough to survive and give us a shot next year,’” Bichsel added.

Some of the casinos, like Bally’s Atlantic City and the Golden Nugget, took in just a small percentage of what it did with hotel room rentals, and the sale of food and beverage, during the second quarter of 2020 compared to 2019.

Bally’s made $74,000 from food and beverage and $14,000 from rooms, compared to the millions of dollars during the second quarter of 2019.

Others, like the Borgata, Caesars Atlantic City, Hard Rock, Harrah’s, Ocean Resort Casino, brought in nothing from those amenities.

Louie said that at Ocean Resort Casino, “we’ve fared well” on the hotel side. Demand for rooms “is at virtually the same level as it was last summer.”

Data on food sales and hotel room profits during the third quarter, which runs July 1 to Sept. 30, is not published until Nov. 23. Hotel rooms are not bound by capacity requirements under the governor’s statewide restrictions, but properties must adhere to a litany of sanitization guidelines.

In the short-term, the NJDGE is slated to release data on Oct. 15 on how the casinos fared in September, the first full month of indoor dining after a four-month ban, including a false start on a reopening originally slated for the July Fourth weekend.

“Not having indoor dining and drinking and smoking … really impacted the businesses in July and August, and I think we did a great job providing outdoor venues and were lucky enough to have balconies” overlooking the ocean, Joe Lupe, president of the Hard Rock Atlantic City, said in an interview. “As the fall nears and the weather cools down, to be able to be able to have indoor dining, that plays a big part of the experience.”

Conventional wisdom

Data from the NJDGE showed that Borgata laid off 2,295 previously furloughed employees on Aug. 31.

As the largest casino employer in the city, Borgata typically has more than 5,000 staff on hand. “Borgata may have been impacted more than other properties since they have more of a non-gaming footprint than others,” Bokunewicz said.

“The food and beverage, and convention jobs at Borgata would be among the most vulnerable under current circumstances” like reduced capacity indoor dining and widespread event cancellations.
Hard Rock reported 3,570 people employed as of Aug. 31—the same as on Feb. 29. Ocean reported 2,093 jobs on hand as of Sept. 1, compared to 2,872 staff on March 1.

Without many amenities, “fewer employees are required,” Louie said.

But the lack of events, conventions and conferences across Atlantic City – one of the highest concentrations of conference and hotel space in the Mid-Atlantic Region – has blown a hole in another major economic sector for the city: Business travel. “I think hotels and conference space, not just in Atlantic City, you talk about Las Vegas, other cities as well in New York [City], Chicago, Miami, that’s going to suffer,” Bichsel said.

Atlantic City had already seen a number of major events postponed or cancelled over the past six months. “Once the impact of COVID-19 subsides, I am confident Atlantic City will return to a major group and convention market,” Mark Giannantonio, president and chief executive officer of Resorts Casino Hotel, said in a statement.

Steve Callender, Atlantic City regional president for Caesars Entertainment, which runs Caesars, Harrah’s, Tropicana and Bally’s said in a statement that the company has been able to successfully use its outdoor spaces. He cited a $125 million Waterfront Conference Center that allows groups to use an outdoor parking complex. And he said the space hosted a Bayside Rock Live, a weekly concert series.
“COVID-19 has had a devastating impact on our state and local economies, however Caesars Entertainment has remained steadfast on the path forward as we look toward revitalizing the Atlantic City market,” Callender said. “We’ve remained focused on welcoming back our customers to all the fun they’ve missed; creating lasting, memorable experiences for our loyal Caesars Rewards customers; and bringing more team members back to work.

Generally, few conventions are held during the summer, noted Larry Sieg, president of Meet AC, which handles event booking, sales and marketing for the 500,000-square-foot Atlantic City Convention Center. “It’s the fall, the winter and the spring which sees the most activity,” he said.

Sieg said that a limited number of much smaller scale events have actually been booked at the convention center in recent months.

For now, indoor gatherings are limited to 25 people or 25% of a room’s capacity, whichever is lower, but “that’s not the whole convention center, that’s in a room,” according to Sieg. “We’ve gotten creative.”

But the real money-makers, which can draw tens of thousands of visitors to Atlantic City over a period of days, remain up in the air. “We still have several events in the books we’re hoping we’re going to be able to keep,” he said. “It’s not looking good. There’s a lot of postponing and cancelling that’s well underway.”
The Atlantic City Auction and Car Show, which can bring in upwards of 30,000 attendees, is scheduled for Feb. 4 to Feb. 6, 2021. The 2021 Pool and Spa show is scheduled to run Jan. 26 to Jan. 28, 2021 at the convention center, where it typically attracts at least 10,000 attendees.

Meanwhile, the Atlantic City RV and Camping Show is slated to run Feb. 12 to Feb. 14, 2021 at the convention center. That event also draws a large number of attendees.

“Conferences are just not happening anywhere really,” Gouker said. “That’s been a huge impact not just for Atlantic City. That’s what drives so much of the room visitation, is people coming for conferences. Without that, you’re going to see that part of the business struggling.”