ndustrywide gross operating profits for the second quarter of 2019 fell 6.8% compared to same period last year, based on figures released Thursday by the New Jersey Division of Gaming Enforcement. The $159.3 million reported by the city's nine casino properties was nearly $11.5 million less than the figure reported in 2018, when only seven casinos were operational for the whole quarter.
Through the first six months of 2019, gross operating profits for Atlantic City casinos are down 16.8% compared to the first half of 2018. The industry has reported operating profits of $245 million through the first two quarters of 2019, down from $294.5 million over the same period in 2018.
It's the latest indication that the addition of two new casinos last summer is making things more difficult for properties that were there earlier. Of the seven casinos that were in business before Hard Rock and the Ocean Casino Resort opened, only one - the Borgata - saw its operating profit increase for the quarter.
The quarterly profit losses for the industry are in stark contrast to the monthly gaming revenue reports that have shown increases for more than a year. A 13-month streak of double-digit percentage increases in gaming revenue was snapped in July — the first full month of revenue reporting that compared the nine-casino market evenly — when total gaming revenue was up 7.8%.
Hard Rock Hotel & Casino Atlantic City and Ocean Casino Resort both opened in late June 2018 at the very end of the quarter. Between 2014 and 2016, five of the then 12 casinos went out of business, and the remaining seven found their equilibrium in a smaller market, where less competition meant higher profits for the survivors.
Gross operating profit, which is earnings before interest, taxes, depreciation, and other charges, is a widely accepted measure of profitability in the Atlantic City casino industry, according to the Associated Press. James Plousis, chairman of the Casino Control Commission, noted that net revenue — which reflects gaming revenue, minus all promotional allowances, plus room, food and beverage and other nongaming revenues — was up 18.2% for the quarter, which is the fifth consecutive reporting period of growth for the industry.
"Results from individual casinos show the market was still adjusting to the new level of competition through the second quarter," Plousis said in a statement. "Next quarter will provide an opportunity to compare year-over-year results in Atlantic City’s nine-casino market."
Hard Rock, which spent more than $500 million renovating the former Trump Taj Mahal Casino Resort, reported gross operating profits of nearly $11.3 million in the second quarter and $5.1 million for the first six months of 2019.
"We are very pleased with our continued success and increased profitability," said Joe Lupo, property president of Hard Rock Atlantic City, as reported by the Press of Atlantic City. "However, the second-quarter operating profits show that the increased top-line revenue growth reported monthly is not generating the same increase in operating profits. This speaks to the supply in the market and third-party online providers who are generating most of that top-line, monthly gross revenue reported."
Ocean reported an operating profit loss of nearly $1.2 million in the second quarter and is down $12.75 million for the year. Mike Donovan, chief marketing officer and senior vice president of Ocean, said management was "pleased" with this quarter's results and added figures "would have been even better but for several large table games winners in the quarter."
"Over the last quarter, we have dramatically improved our operating results and we are focused on growing our business for the future. In the second quarter, we saw our highest market share in the property's history and a significant increase in casino, hotel and nongaming volumes," Donovan said. "We are profitable today, and management will focus on remaining cash-flow positive moving forward. We are committed to providing an outstanding customer experience at Atlantic City’s newest casino."
Borgata had the largest operating profit at $55.4 million, up 4.7% from the second quarter last year. It was the only casinos whose operating profit increased in the second quarter this year compared with a year ago. Harrah's had a $23 million second-quarter profit, but that was still down 27% from its performance over the same time period last year.
Tropicana's profit was $22.6 million, down $10.5%; Caesars' profit was $16.3 million, down 33.7%; Golden Nugget's profit was $10.1 million, down nearly 29%; the profit at Bally's was $9.3 million, down 20.5%; and Resorts showed a $5.3 million profit, down more than 40%.