Associated Press reports that the Atlantic City’s casino industry collected an almost 15% lower gross operating profit in the first quarter of 2023 in comparison to the first quarter of the last year. According to the source, the nine casino operators in the city faced the increased operating costs over the given period.
Lower Operating Profit:
New Jersey Division of Gaming Enforcement, as the regulatory body for the industry, reportedly released the report on May 22, 2023 to show that the Atlantic City’s casinos collectively generated an operating profit of $135.4 million in the quarter ending on March 31, 2023. The figure showing a $23.6 million lower operating profit of the nine casinos in Q1 2023 represents an almost 15 percent lower profit level than the $159 million mark collectively reached in the prior year’s quarter.
Higher Labor Costs:
Searching for the causes of the profit decline, Associated Press reports that James Plousis, chairman of the New Jersey Casino Control Commission, said that the casinos are generally facing higher costs this year which have been the result of the significantly higher wages paid to staff that included housekeepers, porters, bartenders, and beverage servers under the contract agreed last summer with the employees.
Gross operating profit is the profit from selling goods or services in a particular period before costs are subtracted. The Atlantic City’s casino industry follows a widely accepted measure of profitability with gross operating profit reflecting earnings before interest, taxes, depreciation, amortization, and other charges (EBITDA).
Plousis reportedly said: “Compared to the first quarter last year, the casino hotels are employing more people and a progressive labor agreement was reached. These steps are emblematic of an industry that is preparing for growth and success.” Associated Press reports that Mark Giannantonio, president of Resorts casino and of the Casino Association of New Jersey, attributed the lower profitability levels to inflation.
Profitability by Operators:
As for the other casinos, their profitability figures in the first quarter of 2023 compared to the last year’s first quarter are as follows:
The Bally’s operating profit of $88,000 follows the $6.8 million last year’s loss. The Ocean Casino Resort’s profit was up 27.6%, to $23.6 million; the Harrah’s profit increased by 21% to $19.2 million; Caesars’ profit grew 7% to reach $11.3 million; Resorts had a $284,000 loss this year, down from the last year’s $527,000 profit.
The Borgata’s profit declined more than 50% to $22.8 million; Hard Rock – down 17.5%, to $22.2 million; Tropicana – down 15.3%, to $16.7 million. The Golden Nugget saw a profit of $4.8 million, going down from a $5.6 million profit in Q1 2022.
Online entities saw the following operating profit figures in Q1 2023: Resorts Digital – a 6% increase to $8 million, and Caesars Interactive Entertainment NJ had 13.2% lower levels to arrive at $6.8 million. The room rental rates were in the $113 – $212 range, whereas the overall resort occupancy rate for the first quarter of 2023 was 65.2%, which is 2.1% more than the last year.