Hard Rock International has yet to put in a bid or announce plans to compete for one of three downstate New York casino licenses that were officially put up for the bidding process in early July this year.
However, at the East Coast Gaming Congress in Atlantic City that kicked off last Wednesday, the company’s Chairman, Jim Allen stated that while his company’s Boardwalk property in Atlantic City is one of the more profitable casinos there, he sees the three New York casinos as an existential threat to some of the smaller operations.
Downstate NY Customers Contribute Heavily to AC Revenues
Upstate New Jersey and downstate New York account for about a third of all casino revenue in the city. Allen said Thursday: “There’s no doubt <NYC casinos are> going to have an impact on this particular market.”
Casinos in Las Vegas and almost all outlying operations in Nevada have been posting record revenues since reopening after the pandemic dropoff, with at least 20 months of surpassing pre-pandemic revenue levels and setting records month after month, New Jersey has not fared so well.
While revenues are high at over $3 billion for the nine operating casinos, profits were only up 5.6% over March earnings last year. Inflation-induced increases to the operators’ bottom lines due to inflation are seen by observers and the operators themselves as the most likely culprit.
The least financially muscular operations are Caesars, Golden Nugget, and Resorts with operating profits ranging from $21 million to $60.40m. It’s too early to tell what Bally’s will pull down as it posted a $1.9m net loss thanks to extensive renovations on its property.
Mid-to-upper-tier properties include the reasonably healthy Ocean and Harrah’s with profits of just under $100m each.
MGM’s Borgata is the king of the hill taking down more than $140m, followed by Hard Rock which produced profits of $128m, followed by Tropicana with nearly $110m.
Hard Rock has had its eye on a possible casino outside of Atlantic City but that dream was quashed by voters in NJ several years ago. It opened a $500 million hotel in Manhattan last April but no casino is included. Last year, Allen spoke of a $2B casino to compete with other top-tier operators in New York but local media reports suggested earlier this year that the Seminole Tribe’s business ties in Russia could sully any bid for a NY casino license. A year ago, only a few months into the Ukraine war, the company was reportedly looking at three potential sites to set up operations if they were awarded one of the downstate licenses.
Most observers believe two of the three licenses will go to existing video lottery terminal “casino” operators in the state – Resorts World in Queens, and MGM’s Empire City Casino in Yonkers – leaving only one of the licenses up for serious bidding.
Allan Calls for a Change in Perception for AC
Allen spelled out his take on the business climate in AC factoring in competition from New York operators: “You have three or four <Atlantic City> casinos that are very strong and then I think there’s a question as to what happens in that next level down. Inevitably from a business standpoint, there is vulnerability. I don’t think that changes unless there are enhancements to the perception of Atlantic City.”
Several new non-gaming venues are open and in the works to improve the draw of footfalls and to brighten the image of AC as more than a gambling destination. The Showboat is now a hotel with a beachfront waterpark that is expected to open soon but no casino. The former gaming floor is now an arcade with over 600 cabinets and an indoor go-cart track. Miniature golf, a 40’ climbing wall, and a rollerblading course are also in the works.
The derelict former airport, Bader Field is planned to become a multi-use site after a nearly $3b planned investment. However, Atlantic City hit the skids nearly a decade ago and the city’s finances were taken over by the state so only state officials can actually approve the Bader Field development.
Source: Hard Rock Chairman Jim Allen: Atlantic City Threatened by New York Casinos, Casino.org, April 21, 2023