New Jersey’s Casinos Are Starting to Show Profits with Few Competitors in Town
Seven of the eight Atlantic City casinos posted gross profits in the second quarter of 2015, according to statistics released this week by the New Jersey Division of Gaming Enforcement. Only the Trump Taj Mahal, which is still dealing with labor issues, posted a losing quarter.
In the other seven casinos, the loss of four competitors since the beginning of 2014 has meant more business and bigger profits. The collective gross operating profit for all eight casinos combined was 28.3%. The gross operating profits represents revenues before taxes, interest, and other charges.
$132.1 Million in Q2 Profits
The city’s casinos collected $132.1 million in profits this year during April, May, and June. Over the same three months in 2014, the casinos collected $103 million. The numbers do not include the 3 casinos which closed in September 2009: Revel Casino, The Showboat, and Trump Plaza. Revel and Trump were unprofitable, so the boost in revenues with those casinos factored in would jump from $29.1 million to $59 million.
The numbers represents a significant uptick, which is much-needed by the casinos themselves, the city treasury, and the workforce of Atlantic City. The city lost 9000 jobs in 2014, including 8000 in the casino industry. Further casino closings would have heaped disaster upon disaster. At present, Trump Taj Mahal is the only casino with serious issues, but it has the deep pockets of Carl Icahn supporting it.
Golden Nugget Has Biggest Increase
For the casinos still in operation, the biggest bump came from the Golden Nugget, which saw a 902% increase in profits over the same time in 2014. This year’s Q2 profits were $7.7 million, while the profits were only $776,000 in the second quarter of 2014.
Resorts Casino Also Rises
The next-best improvement was from Resorts Casino, which saw a bump of $4.8 million in gross operating profit. That represents a 153% increase from Q2 in 2014. Overall, Borgata and Caesars Atlantic City remain the healtiest casinos in the city. Borgata is first in brick-and-mortar and online casino revenues. Caesars Atlantic City is second in both niches, though the parent company, Caesars Entertainment, remains mired in a bankruptcy process complicated by lawsuits.
Trump Taj Mahal and Carl Icahn
Trump Taj Mahal remains the casino most troubled at the moment. In Q2 2014, the casino showed a $1.8 million profit. In Q2 2015, Trump Taj Mahal showed $902,000 loss. The decline represents a loss of 150%.
Most gaming experts assume Trump Taj Mahal is going to have a recovery similar to the one effected by Tropicana over the past 5 years, because Carl Icahn owns both. At the moment, Carl Icahn is playing hardball with the Taj Mahal’s workers union. As long as those negotiations continue, the casino is unlikely to turn the corner.
Revel Casino Lawsuit
Revel Casino is expected to re-open sometime in the future, perhaps as early as fall 2015. New owner Glenn Straub is in a protracted legal battle with ACR Energy Partners over the cost of energy to the Revel Building. Straub won a judge’s ruling to force ACR to provide energy to the building at a cut-rate price for the time being, for the sake of maintenance. New Jersey newspapers have reported ACR Energy Partners is running out of money and might soon close their doors, perhaps allowing for Revel Casino to move forward with an alternate and more affordable energy plan.
Overall, the financial picture is much healthier for Atlantic City casinos in 2015. Over the first six months of the year, gross operating profits are a combined $213.4 million. That represents a 27.4% increase from the first half of 2014.
Despite the good news, Atlantic City is still facing a serious uphill climb to get out of the poor financial condition it is in. Several respected financial publications listed Atlantic City as the worst city economy in the United States in 2014–worse than Detroit even. At present, the State of New Jersey has loaned $40 million to the city to help the city keep going.
AC could not borrow from financial institutions, because its credit rating had fallen so low. The city government is expected to pay back that short-term loan to New Jersey in August 2015, so the moment of truth is soon approaching. Every dollar generated by the local economy is helpful.
