More for the Shore!

Let’s pick up right where we left off.

In my last editorial on Atlantic City gambling revenue, the question was whether or not the fact that they had their first positive year-over-year change in a decade was evidence that Atlantic City was finally starting to find some sort of balance. In answering that question, I found it especially potentially telling that December of 2016 was such a strong month compared to December of 2015. The January numbers are out, and we can see if the trend continued.

In terms of total gaming win, here is what we have:

*The State of New Jersey has two sets of numbers, one set includes Trump Taj Mahal (closed) and the other does not. I am obviously using the set of numbers that includes Trump Taj Mahal because it stands to reason that some of the Atlantic City business would have otherwise went to Trump Taj Mahal were it still in operation.

What we can see from these year over year numbers is that Atlantic City absolutely smashes last year’s performance in both the Internet (+28.63981%) and physical (+5.915922%) gaming segments. While last year’s (2016) improved performance for the entire year compared to 2015 was entirely attributable to growth in the Internet Gaming segment, we can clearly see that Atlantic City’s improved performance for 1/17 vs. 1/16 is due to both the Internet and casino segments. Furthermore, while the Internet (+$4,189,285) leads in percentage, physical gaming (+$10,381,333) leads in raw dollars and cents.

Environmental factors may be partially at play due to the fact that Atlantic City did not have any especially tough snowstorms this year (Max Depth 4.0in.) as compared to last year (Max Depth 8.0in.) and the fact that the average (mean) temperature was about four degrees hotter this year. While that may not seem like much, the absence of a particularly heavy snowstorm could potentially be the difference between a good day for the physical gaming segment and a bad one.

Here is what we get when we look at the individual casinos in terms of percentage growth of January ‘16 compared to January ‘17 in the physical segment:

The total percentage increase amongst current operators was 14% whereas, as already mentioned, the total increase in the casino segment was 5.9159% overall. Compared to those totals, Bally’s and Harrah’s leap out as underperforming casinos, but that is somewhat offset by the fact that CET owns Caesars, and Caesars overperformed the market.

In terms of pure dollars and cents in physical casino revenue, Caesars (+$8,216,625) was slightly edged out by Borgata ($8,455,852), but again, Caesars absolutely dominated in percentage.

Tropicana remains an interesting story because its revenue improvement of 15% ($24,303,070 compared to $21,137,805 in January of 2016, +$3,165,265) seems impressive enough, but when we look at the fact that the Trump Taj Mahal was good for $12,437,038 last year, it would appear that Tropicana only managed to retain about 25.45% of the Trump Taj Mahal market for the month, and that’s not including for the fact that the live gaming segment was up overall for all of Atlantic City.

Granted, Trump Taj Mahal was undoubtedly losing money at this time last year, but certainly Carl Icahn would have hoped to have diverted more of the Trump Taj Mahal business over to Tropicana, which he also owns.

Resorts, up 8.6% and nearly a million actual dollars compared to January of last year performed very well, in my opinion, given its location at the far end of the Boardwalk. It remains unknown whether or not the former Revel Casino, now to be known as TEN will ever open as it missed its projected Presidents’ Day opening date, so we will see how Resorts holds up over the Summer if they end up being essentially all alone on that side of the Boardwalk.

The stagnant performance of Bally’s hardly comes as a surprise given the fact that it is basically a redundant casino to the strong performing Caesars. Golden Nugget also seems to have tailed off a bit, though it set quite a high bar for itself last year (as compared to previous years) as they managed to make the most out of the several casinos that closed in Atlantic City in 2014 and have continued to build on that success ever since. Golden Nugget may simply be reaching the point that (absent another closure or growth of the Atlantic City market in general) there really isn’t that much room for them to grow.

The 28.6% increase in Internet Gaming revenues hardly comes as a surprise as Atlantic City has continued to improve in that segment of the market ever since initially going online. There’s really little reason to believe that online gambling won’t continue to grow in Atlantic City and these sorts of continuously improved revenues should serve as a kick in the ass to the states that have dragged their feet with respect to online gambling expansion.

Golden Nugget (+90.6%) and Resorts Interactive (+120.5%) are clearly doing something right online as they lead the charge in online gambling revenue combining to account for 95.45% of the growth in that segment. That figure, of course, is somewhat inflated due to the fact that Borgata, -$801,314 was down 17.5% in online gaming revenue compared to January of last year. The only thing that seems like it may have really changed is that MGM now has full ownership of Borgata, so perhaps they simply don’t put as much emphasis on the online gaming segment as they did when it was run by Boyd.

Either way, for both the Golden Nugget and Resorts, online gaming makes up just north of 20% of the revenues for each company, pretty damn impressive! That figure was 11.25% for Tropicana, roughly 12.5% for Caesars Interactive* and 5.858% of Borgata’s total revenue.

*It may not even be that high for Caesars Interactive, it just depends on whether or not one is comparing the Internet Gaming Revenue against Caesars only or against all CET properties. If we compare the Internet Gaming revenue against all CET properties in Atlantic City, then we see that Internet Gaming only accounted for 5.42% of CET’s revenue for the month of January.

For a little bit of perspective, the combination of Golden Nugget and Resorts for January 2016 combined for 42.185% of all Atlantic City Internet Gaming revenue as compared to only 16.49% of the total physical casino revenue, apparently, the Internet is the great equalizer!

Either way, January of 2017 was undoubtedly a great month for Atlantic City as tremendous gains were enjoyed both in live casino gaming revenue as well as Internet Gaming revenue. However, all of the Atlantic City casinos should be in something of a wait and see mode as we wait for the February numbers to come out, a similar performance in February would be growing evidence of an actual, and much needed, trend. One other future event (that I’m starting to wonder whether or not it will ever happen) is that TEN Casino (the former Revel) should be reopening one of these days, and obviously, it is not going to create a market unto itself but will pull from the other Atlantic City casinos.

For now, that day has not yet come, and all the currently operating A.C. casinos can do is wait. For our part, we’ll get back to you when the February reports come out, or when TEN Casino opens, whichever comes first. (I’m betting the reports come out first!)