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Last year, the city’s downsized casino industry posted gross gaming revenue of $2.6 billion, up 1.5 percent from $2.56 billion in 2015.
It was the New Jersey online gambling industry that would prove the difference maker.
In 2016, the online arm of the state’s gambling industry grew by 32.1 percent; enough to convert a marginal loss by the land-based industry into a small total win.
On paper, a 1.5 percent gain is nothing to write home about, especially considering the growth of online. But given the turmoil AC has endured over the past few years, any gain, under any circumstances, is noteworthy.
Over the past few years, AC’s casino industry has been purged, with only seven casinos remaining, down from a peak of 12. In 2016, the boardwalk city saw the struggling Trump Taj Mahal shutter its doors.
Despite this, the industry as a whole isn’t far off from its 2013 tally: $2.87 billion in 2013 compared to $2.6 billion in 2016.
What this means is gaming revenue is concentrated at a smaller number of properties, suggesting that quality trumps quantity.
With revenue on the rise, it appears the Atlantic City market is beginning to right-size, although there are plans afoot to open at least one of the now shuttered casino properties.
The 2016 revenue numbers didn’t sneak up on anyone.
Over the past two years the individual casinos in the market have posted revenue increases, even as the industry as a whole continued to slide.
This multi-year trend can be seen by looking at the operating profit numbers of the remaining casinos from 2014 to 2015:
|Casino||2015 Op. Profit||2014 Op. Profit||% Change|
|Bally's||$40 million||$23 million||76.6%|
|Borgata||$216 million||$158 million||36.6%|
|Caesars||$83 million||$60 million||39.4%|
|Golden Nugget||$23 million||$4.5 million||396.3%|
|Harrah's||$123 million||$97 million||26.0%|
|Resorts||$16 million||$2.5 million||525.0%|
|Tropicana||$46 million||$60 million||-22.4%|
I expect both individual casino revenues and profits to ascend when the 2016 data is released in the coming months.
The remaining casinos are no longer trying to hang on and survive, they’re thriving.
What shouldn’t be lost in the shuffle is that were it not for online gambling Atlantic City would have experienced its tenth consecutive year of declining revenues.
Land-based casino revenue ($2.41 billion) was down 1 percent year-over-year, but internet gaming revenue rose 32.1 percent in 2016, falling just shy of $200 million. It was this $200 million that pushed GGR past 2015’s tally.
Suffice it to say, online gambling has become an integral part of New Jersey gaming revenue:
If the industry continues to grow, it’s not out of the question that 10 percent of New Jersey’s gaming revenue could come from online gambling by 2020.
Without the legalization of online gambling in 2013, the takeaways from the year-end New Jersey casino revenue reports would shift from positive to negative.
Historically, Atlantic City has been streaky when it comes to gambling, with the industry going through prolonged periods of plenty and famine.
Casino revenue in Atlantic hit an all-time high of $5.2 billion in 2006. Additionally, 2006 marked the 29th consecutive year of year-over-year growth, as casino revenue increased each and every year since the first casino launched in 1978.
Despite competition popping up in the area, the decade leading up to the 2006 record saw total casino revenue rise by 25 percent, thanks to modest, but sustained growth:
But from 2007-2015 the numbers went in the opposite direction:
The decline has many causes:
Two of the three issues listed above are improving, as the number of Atlantic City has dropped significantly and the economy is turning around — although it hasn’t reached Atlantic City yet.
Considering the city’s historical trends, and the current situation, it will be interesting to see if Atlantic City can continue this growth trend, or if 2016 will come to be seen as an outlier several years down the road.
There’s no reason the Atlantic City casino industry can’t build off of 2016:
Of course, there are also dangers on the horizon. From continued casino expansion in surrounding states (or in North Jersey) to Atlantic City’s plunge towards bankruptcy.
Image credit: f11photo / Shutterstock, Inc.