With 14.1% YoY growth in New Jersey’s gambling sector, what’s next for the garden state?
The New Jersey Division of Gaming Enforcement has reported that the state’s casinos and their online affiliates recorded net revenues totaling $828.8 million for the second quarter of 2022 – a 14.1% increase from the same quarter last year. The gross operating profit for the period was $183.6 million.
Bouncing Back?
These figures show that the state is bouncing back from the effects of closures during the Covid 19, although land-based casino figures show slower growth than the overall figures reflect. The figures for July show that casinos and horse tracks that offer sports betting increased 6.7% from a year ago. The resort’s casino sector struggled to return to pre-pandemic levels in revenue from in-person gamblers. Five of them, Bally’s Borgata, Golden Nugget, Hurrah’s, and Tropicana, have failed to do so.
What is affecting the figures?
Many factors affect the figures, and it is hard to find a line in the sand to make comparisons and understand what is happening. The main factors affecting gambling revenues are broadly the rise in online gambling and the opening up of new markets in neighboring states. New Jersey used to be able to rely on New Yorkers coming across stateliness to place a bet. However, since New York has legalized sports betting, New Jersey has to up its game to attract customers. In addition, the pandemic changed people’s gambling habits and shifted them to play at the top NJ online casinos. Only time will tell if this is a long-term trend or a blip.
Looking at the data currently available for the first six months of 2022, net revenue was up by 19.9% for the same period last year. Net revenue was $1.5 billion, and gross operating profit was $339.3 million. Looking at the figures in more depth, it is interesting to see that the casinos in the resort that are performing well are the city’s two newest venues, The Hard Rock Hotel & Casino Atlantic City and The Ocean City Resort.
Jane Bokunewicz, faculty director of the Lloyd D Levenson Institute of Gaming, Hospitality, and Tourism, Stockton University School of Business, said about the six-month figures,
“Those revenues represented 46% of total net revenue in the second quarter of 2019 and 39% in the second quarter of 2021. At $374 million, revenues from lodging, food & beverage, entertainment, and other non-gaming sources generated 44.4% of total revenue for the quarter. This demonstrates a return to pre-pandemic behaviors for in-person casino patrons and further supports operators’ recent capital improvement investments. These non-gaming amenities, as well as the gaming ones, diversify the casino product in Atlantic City and the region.”
James Plousis, the Casino Control Commission Chair, believes that guests look for more from their visit than just gambling. He notes that while the figures for the second quarter were not as good as might have been hoped, it is the businesses that are investing in new facilities that are flourishing. He said that the market growth in this area demonstrates that gaming and leisure travelers are looking for a first-class experience.
He remarked that,
“Although gross operating profit figures were relatively flat in the second quarter, during that period, the casino hotels were making significant investments in their facilities to create new and exciting experiences for their guests to enjoy. Those capital investments are critical to ensure the long-term appeal of Atlantic City as a resort destination.”
Diversification
New Jersey will probably never be as famous as Las Vegas and has always had a very different offering to the town where ‘anything goes.’ However, it cannot afford to rest on its laurels. The gambling market in the USA has changed significantly over the past few years. With the upcoming referendum in California regarding legalizing gambling, the competition is only going to heat up. Diversification and innovation seem to be the key to maintaining and growing market share. In addition, it needs to continue attracting leisure travelers looking for an experience they cannot get by placing an online bet at home.
Sports Betting
New Jersey’s sports betting market is facing particular challenges. New York began offering mobile sports betting earlier this year. Almost overnight, this propelled the state into the number one position in terms of the amount of sports bets taken.
New Jersey racetracks that offer sports betting saw their take fall from earlier in the year. Gamblers wagered $531.8 million on sports in July, down from $578.7 million for July 2021. Meadowlands in East Rutherford, Monmouth Park in Oceanport, and Freehold all saw a drop in revenues from the same month last year.
The Future
The future for the garden state would appear to be in attracting customers for a whole leisure package rather than just a gambling experience. The Hard Rock has a full program of alternative events, including a Jazz Festival, a Sushi Rolling School, and club nights for jazz, funk, and soul fans. In addition, Borgata has significant name events in the offing, including Billy Ocean and Jerry Seinfeld on the bill. Hard Rock’s revenues are up 46% on last year, so this seems to be an excellent example of what guests are looking for. The events attract the guests who then spend in the venues.
