One Atlantic City casino owner thinks the current 15-month stretch of double-digit gaming revenue increase in New Jersey isn’t as big of a deal as some make it out to be.
Earlier this week, Golden Nugget Atlantic City owner Tilman Fertitta told the Press of Atlantic City that the gaming market in Atlantic City can’t sustain nine casinos. Despite the increasing revenue numbers, Fertitta’s outlook for the future of casinos in the city is bleak.
“It’s not a nine-casino market, and I don’t understand why nobody realizes that,” said Fertitta. “You could say that the market is going up and that we’ve added thousands of jobs, but now every other casino has had to lay off jobs, so I don’t even know how big the net gain is. But now, none of the casinos have the cash flow that they did.”
Fertitta has a point. Even with the current revenue streak intact, the city’s casinos experienced a drop in profit during the second quarter of 2019. With that decline, Fertitta foresees a lack of re-investment into the casino’s product, and an eventual closure of a few properties.
A similar market contraction took place earlier in the decade. Between 2014-2016, five casinos went out of business in Atlantic City, shrinking the market from 12 to seven gaming operators.
“This is what happened to Atlantic City the first time, and it’s how the casinos got all run down,” said Fertitta. “People didn’t have the money to keep [their [properties] new and fresh by putting money back into it. I think it’s a huge mistake again. It’s a seven-casino market, and when it was seven casinos, everybody was putting money back into the properties. Now, they won’t.”
One of the last casinos to shut down was the iconic Trump Taj Mahal. For years, it was home to one of the busiest poker rooms in the city and was featured in Rounders. It closed in October 2016 and just five months later, the property was purchased by the Seminole Tribe of Florida, which built Hard Rock Atlantic City in its place.
Ocean Casino Resort, which was opened at the site of the failed Revel Casino, and Hard Rock were both opened in June 2018 amid a resurgence in the Atlantic City market, due in part to legal online gambling.
The two newest Atlantic City have taken a good chunk of the market away from some of the smaller, less popular casinos. During the streak of revenue growth, Fertitta’s own Golden Nugget has seen revenues shrink.
Golden Nugget experienced double-digit revenue decreases year-over-year in April, May and June of this year. In March, it fell just shy of that mark with its revenue dropping 9.3 percent from March 2018.
Bally’s, Harrah’s, and Tropicana have also seen similar revenue drops during that period, indicating that the state’s overall increase isn’t shaking out well for all parties involved.
Fertitta doesn’t believe that his casino will be one of the ones forced out of business. Mostly because of its large presence as one of the state’s leaders in online gaming and because of a new bill that just became law.
Recently, Gov. Phil Murphy signed a bill that will allow the Golden Nugget to offer wagering on NBA games. Before the bill was passed, the casino was not allowed to accept wagers because Fertitta owns the Houston Rockets.
“It will be huge for us,” said Fertitta about the new law.