New Jersey’s Gaming Revenue is Declining

There are not too many ways to spin it. Every way you look at it, the data only has one message: New Jersey’s gaming revenue is on a steady decline. This might come as a surprise  considering the state’s relatively large number of land-based casinos compared to its size, and the fact that it’s one of only seven where play with real money at casinos online is legal. To the untrained eyes, it might seem like they are in the upward tick or at least breaking even, but on closer inspection, the devil becomes unavoidably obvious in the details.

The Devil in the Details

According to the New Jersey Division of Gaming Enforcement’s press release in December 2023, announcing gaming revenue results as of November 2023, the year-to-date total gaming revenue reported by casinos, racetracks, and their partners was reported to be $5.3 billion. A 10.5% increase on the $4.8 billion realized by the same group of establishments in the same period the year prior. However, while it appears to have done marginally better than the previous year, having registered $482.4 million in revenue in the month of November, 9.4% more than the previous year with $437 million, it has dropped by $4.7 million compared to October’s $487.1 million the same year. This trend can be traced back to September, with the monthly revenue being 6.6% behind October with $521.5 million. The year-to-date casino wins for all nine casino hotel properties in Atlantic City, New Jersey, is $2.6 billion, only 1.8% up from 2022’s tally. For a clearer representation of the problem, however, you need to compare November’s revenue haul to last year’s, which is a meager 0.2% up owing strictly to a 2.7% increase in slot machine pay despite a 6.5% drop in table games revenue. As of the third quarter of the year 2023, bar the Hard Rock and the Ocean Casino resort, all the other casino hotel properties in Atlantic City, New Jersey, recorded revenues lower than the previous year. The following is a breakdown: Hard Rock Hotel and Casino, Atlantic City: Realized a gross operating profit of $44.3 million. Up less than 1% from last year in the same period. The Ocean Casino Resort: Realized a profit of $43 million, about 10% more than the previous year across the same period. The Borgata Hotel Casino and Spa (operated by MGM Resorts): This casino saw the most profit at this time of the year, having realized $73.5 million but down just under 2% from last year in the same period. One reason Borgata kept its profits up is how some expenses were handled, moving from operating to non-operating expenses. The Tropicana Atlantic City: As of the first quarter, the casino realized $36.7 million in profits, down 11.5% across the same period the year before. Harrah’s Resort Atlantic City: This casino realized a gross operating profit of $30 million, down over 13% from the previous year. Caesars, Atlantic City: One of the big nine in Atlantic City, Caesars has had profits of $21.1 million in the third quarter, down about 18% from last year. The Golden Nugget Atlantic City Hotel, Casino & Marina: The Golden Nugget has turned just over $11 million in profit, down nearly 4% from last year. Bally’s Atlantic City: Bally’s has only had $7.3 million in profit and is down over 32% from last year. The Resorts Casino, Atlantic City: The Resorts made the least profit at $7.2 million, down nearly 43% from last year. As unsightly as these stats and figures look, they begin to look much worse when the influence of internet gaming and sports wagering is considered.

Do Internet Gaming And Sports Wagering Prop It Up?

Many believe the casinos would do much worse in revenues without internet gaming and sports wagering. And the numbers back up this claim. Players who enjoy online casino games and sports betting have contributed massively to the bottom line of casinos in New Jersey. This year, internet gaming alone has contributed $1.74 billion in revenues to the gaming industry in New Jersey, which is 15.4% up compared to the $1.51 billion generated last year in the same period. In November 2023, internet gaming wins amounted to $171.6 million in revenue compared to $146.2 million last year, with the Golden Nugget leading in New Jersey with the highest internet gaming win at $50.1 million for the same month, nearly 33% more than last year. As stated earlier, the other important contributor is sports wagering. The year to date puts the sports wagering revenue at $897.2 million this year, 32.9% increase to the $675.3 million from the year prior, $95.9 million in revenue for the month of November alone in 2023, 19.2% up on the $80.4 million from last year the same month with Resorts Digital, incorporating Fox Bet and DraftKings, earning the most sports wagering revenue in the month at $19.2 million, 15.9% up on last year. The sheer magnitude of the growth in sports wagering in casinos in New Jersey is laid bare when you consider the sports wagering handle for the month of November is $1.6 billion, 45% up on the $1.1 billion last year, and the total wagering handle for the year at $10.7 billion, 8% up from last year. However, the issue with internet gaming and sports wagering is that even though they are on the rise, they are not good indicators of the health of the gaming industry in New Jersey, as most of the proceeds are shared with other third parties. So, at the end of the day, how much is being made is in some way less than is reported in their accounting books. It thus goes to say that the decline in revenue generated by walk-in casinos does not look like it is slowing down anytime soon, and coupled with the action by casino workers to put a stop to indoor smoking, it might result in even less foot traffic in all nine of the Atlantic City Casinos, negatively affecting the revenue generated even further.