Summary: The two new casinos in Atlantic City as well as neighboring state competition have caused Caesars three properties in New Jersey to decline in guest hotel stays as well as revenues.
In June 2018, the Hard Rock Atlantic City and the Ocean Resort Casino both opened for business, on the same day no less. With the launch of two new gaming properties in Atlantic City, current operating casinos were expecting to be affected in some manner. There were seven casinos operating in the region and this would bring about even more competition. Caesars Entertainment Corp operates three properties in Atlantic City and all three were subject to lower guest stays as well as a decrease in revenues due to the new competition.
AC Casinos Affected
Caesars owns the Harrah’s Resort Atlantic City, Caesars Atlantic City and the Bally’s Atlantic City casinos. Each venue has operated in the region for decades and has been successful. However, once the new casinos opened up, the three began to see issues. When looking at the seven total properties operating in the region before the two new venues were opened, the Caesars properties were hit the hardest.
When looking at hotel stays, the numbers were down. Bally’s even downsized the number of rooms they offer, and they still saw a decrease in overall stays. Before the two new venues opened, the Caesars Entertainment Chief Financial Officer, Eric Hession, stated that he felt the properties would take a hit. The new casinos would cause issues along with the competition that continues to build in neighboring states such as New York and Pennsylvania.
Looking at the individual numbers for each casinos, the declines can easily be seen. Harrah’s Atlantic City earned $332.9 million in gaming revenues for 2018 which is a decrease from the previous year of 8.4%. However, despite the decline, the casino still came in 3rd place among the nine total venues for last year’s earnings.
Caesars earned $326.9 million and Bally’s earned the least at $191.9 million. Caesars was down 11.2% and Bally’s was down 9.1%. The results saw Caesars finish in 4th place while Bally’s was in 6th by the end of the year.
Expert analysts suggest that the Caesars properties are struggling due to the lack of investment by the parent company. Caesars and Bally’s are two of the oldest properties in the region and could benefit from capital investment. Harrah’s has seen an investment by Caesars, with $56 million being spent this year on renovating and rebranding the Harbour Tower, the oldest hotel tower of the facility.
For Caesars and Bally’s to see a turn around, some type of investment will have to be made. The company is making efforts to revitalize their operations in Atlantic City, having spent around $200 million within a four year time frame with more changes yet to come this year.
Along with their land-based operations, the company also focuses on online poker and casino gaming. It will be interesting to see how the brand fares with their three land-based facilities as well as with online services in 2019. Competition will continue to build as Pennsylvania begins to offer online gaming as well as satellite casinos, VGTs are added and sports betting.
Caesars may continue to see declines if competition continues to be a factor.