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There are two sides to every coin, and the performance of New Jersey’s casinos over the course of 2015 was no exception.
The New Jersey Division of Gaming Enforcement’s year-end revenue report can be used to make the case that Atlantic City casinos will by and large continue to struggle, but it can also offer some rays of hope for the future of gambling in Atlantic City.
Industry-wide, gross gaming revenue was down 6.5 percent in 2015, falling to under $2.6 billion, less than half of the industry’s record-setting year of $5.2 billion in 2006, and its lowest total since 1987 – without taking inflation into account.
The historical trend line in New Jersey is actually quite amazing, as Atlantic City’s casino revenue rose every year from 1979 (the industry launched in 1978) to 2006, a 27 year span, and has dropped every year from 2007 to 2015, a nine year span.
However, as poorly as the totality of the industry did, on a case-by-case basis, New Jersey’s casinos did quite well in 2015. The reason for this discrepancy was the closures of Trump Plaza, Showboat, Revel, and Atlantic Club at various points in 2014. With wayward players, many (but not all) went to other Atlantic City casino properties, which led to current operators experiencing a combined revenue increase of 3.1 percent year-over-year.
Caesars (-6.1%), Bally’s (-6.4%), and Trump Taj Mahal (-16.5%) were the only casinos with year-over-year revenue declines. It should be noted that all three of those casinos (Caesars and Bally’s are both owned by Caesars Entertainment, as is Harrah’s) are mired in bankruptcy and/or going through restructuring.
Borgata (7.9%), Harrah’s (2.5%), and Tropicana (5.3%) all posted single digit year-over-year growth, while Golden Nugget (24.6%) and Resorts (16.4%) were the big winners in 2015.
In 2014, the first full year of online gambling in New Jersey, the myth of cannibalization was essentially put to rest.
Online gambling provided a critical safety net for the state’s remaining casinos. Online gambling allowed Borgata to post year-over-year gains instead of year-over-year losses, and at the same time bolstered several other casinos’ revenue numbers. And all of this occurred in what will likely go down as the most turbulent year in New Jersey casino history – which is saying quite a bit about how tumultuous 2014 was in Atlantic City.
In 2014, online gambling accounted for 4.5 percent of the state’s total casino revenue, with online gambling comprising 3.5 percent – 8.2 percent of individual operators’ total revenue.
In 2015, the state’s online gaming operators posted even better results. Online gambling’s share of total casino revenue reached nearly 6 percent, with two casinos able to boast that over 10 percent of their total gaming revenue came via online gambling.
Since the current operators remain unchanged (for now), 2016 will be the first year we can compare the totality of the New Jersey casino industry, including online gambling, against the previous year without having to account for casino closures.
Because of this, it’s quite likely 2016 will reverse the current nine-year downswing the state’s casinos have been suffering through.
In fact, 2016’s numbers could be extremely positive if one or more of the following occurs:
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