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Downstate New York Casinos Could Shrink Atlantic City Revenue
By Jeff Osienya Apr 22, 2023 IndustryGaming industry stakeholders in Atlantic City are fearing for their business owing to the growth of New York’s scene. Panelists in the just concluded East Cost Gaming Congress project that Atlantic City’s revenue could sink by 20 to 30% or more.During the recent East Coast Gaming Congress, which took place from April 19th to 20th, panelists raised a couple of concerning remarks about the United States gaming scene. The said comments related to the high-flying gaming scene in the Empire State and how its growth and expansion could impact the Garden State’s Atlantic City.
Based on the general sentiments of the gaming event, even though New York is in a sea of praise for its impressive performances at a relatively young age in the gambling scene, there is a caveat. Top stakeholders in the nationwide gambling sector worried that NY’s winning streak would likely hurt New Jersey’s revenue streams in the same industry.
Atlantic City Could Lose Up To Over 30% of Its Revenue
From the remarks made by the esteemed panelists in the East Coast Gaming Congress, it appears that the upcoming plans to build three new casinos in New York are causing jitters. Hard Rock casino company chairman Jim Allen pointed out that introducing these casinos could lead to a drastic drop in revenue among the Atlantic City casinos. According to Mr. Allen, this downturn may end up being so severe that it could lead to the closure of at least one Atlantic City Casino.
While this may, for some reason, seem like an exaggeration of sorts, Jim Allen strongly believes that the decline is coming, and it could spell doom for the wider Atlantic City casino scene. Speaking to the Associated Press (AP), he remarked:
Quote“Atlantic City receives 20, 30-plus percent of its revenue from upstate New Jersey and downstate New York, and there’s no doubt it is going to have an impact on this particular market.”
To say the least, Jim was speaking in his direct capacity as a significant stakeholder in the matter. Jim’s Hard Rock Casino owns a casino in Atlantic City and is also one of the bidders of the new New York casinos in the pipeline. Hard Rock Casino, alongside Borgata and Ocean Casino Resort, is among the top-performing casinos in the market and is always on the lookout for emerging partners to broaden their horizons in the United States. Commenting on the effects NY’s expansion could have, Jim noted:
Quote“So, you have three or four that are very strong, and then I think there’s a question as to what happens in that next level down. I think there’s a concern there that if these casinos don’t perform, then inevitably, from a business standpoint, is there vulnerability? I don’t think that changes unless there’s an enhancement to the perception of Atlantic City.”
According to Jim, the rosy revenue numbers from each state may paint an inaccurate picture by including sports betting and internet gambling revenue. But then, when calculated, that revenue also accounts for monies that must be shared with third-party providers and will not wholly go to the casinos.
The Empire State is expected to award new licenses to operators who will be running the upcoming casinos later in the year.
Wall Street Analysts Are Also Reading from the Same Script
It’s worth noting that the comments about the potential adverse effects of the upcoming New York casino establishments didn’t just come from Jim Allen and his fellow gaming execs. Likewise, the consensus among the experts in the broader business and finance sectors is that the Atlantic Casino scene will bear the brunt of the new casino establishments in downstate New York.
Duane Boulingy, Wells Fargo’s Managing Director, advised the Atlantic City casinos to continue investing in their businesses and ensure their leadership positions are filled with competent people. On his side, gambling historian at the University of Nevada Las Vegas David Schwartz indicated that a clearer outlook would be drawn from how the existing Atlantic City casinos will react to the impending competition from New York.
Although he admitted that there is a chance that one or two casino establishments in Atlantic City may close shop, he advised the casinos to change tact to keep up with the stiff competition. He said:
Quote“While it’s possible that one or more casinos could fold their tents and exit the market, there is also an opportunity for casinos to expand their offerings and give New Yorkers a reason to drive down to Atlantic City. After all, millions of people who live within a short drive of casinos fly to Las Vegas every year. Diversification of amenities and a focus on superior customer service for gamblers might offset the convenience of ‘local’ casinos in New York.”
The Atlantic City Casino Outlook
As things stand, the Atlantic City casino scene is thriving. Three Atlantic City impressively reported a 2022 gross operating profit, each exceeding the $100 million mark. The three were Borgata with $140.2M, Hard Rock with $128M, and Tropicana with $109.7M.
Meanwhile, despite not breaking the $100M ceiling, Ocean ($96.2M) and Harrah’s ($89.4M) came close to the $100M mark. Other bigwigs in Atlantic City, like Caesars($60.4M), Golden Nugget ($30.6M), and Resorts ($21M), also reported some decent returns. The only loss maker for the 2022 calendar year was one Bally’s, which reported a $1.9 million net loss that’s attributed to the monumental renovations that the casino undertook.
On the other hand, Hard Rock had recently announced plans to develop a new casino in the Northern Meadowlands Racetrack in New Jersey. However, following a statewide referendum that voted on the issue, those plans were rendered dead in their tracks. Speaking about the failed attempt by Hardrock, Jeff Gural, who runs the Meadowlands Racetrack, opined that the Meadowlands casino would save people the hassle of traveling across state lines to enjoy their gambling experience. He said:
Quote“I can’t imagine people would think driving over the George Washington Bridge, paying $18 in tolls, and sitting in traffic is preferable to going to a casino in the Meadowlands.”
Diversification of Business is the Way to Go for Atlantic City
While it is evident that the casino business is a vital aspect of the growth of Atlantic City, it is also not healthy for its economy to be overly reliant on casinos. Credit has to be handed out to Atlantic City, though, having made steps to diversify its business model and to make it less reliant on gambling.
Some of the ventures Atlantic City has invested in include new restaurants, entertainment spots, and conference halls, alongside shopping and personal care amenities. Additionally, gaming and entertainment industry bigwigs have also earmarked vast sums of money to be injected into Atlantic City. For example, a new $100 million water park will be opening in a couple of months to serve patrons year-round. On top of that, Caesars Entertainment plans to unveil a new entertainment venue and a residency show akin to those prevalent in Nevada’s Sin City.
Also in the works is an Island Waterpark by the Showboat, a former casino that operates as a non-gaming hotel today. The Island waterpark will cover 103,000 square feet and will include lots of water rides, a surf simulator, and a lazy river.
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