Atlantic City used to be the place to be for casino gambling. Since the 1970s, people on the East Coast have flocked to Atlantic City to gamble. However, in the 21st century, Atlantic City casinos have seen their profit margins fall. This seems to be the case in Atlantic City. Casino profits continue to decline, with the bigger casinos taking larger and larger shares of the pie.

Atlantic City

Atlantic City began its life as a resort town. The town, located on a beautiful stretch of the Atlantic Ocean, began as a place for people to come and escape the New Jersey heat. Atlantic City became the go-to destination during the mid- and late-19th century. There were small gambling houses all over the boardwalk. During the Great Depression, New Jersey legislators outlawed gambling as part of the social reform movement. In the 1970s, legislators revived gambling because of the area’s economic downturn. The city is now the second-largest gambling market in the United States. Nearly $4 billion in revenue flows through the city each year. Atlantic City tries to capitalize on its position as a playground for the East Coast.

The Numbers Game

On the surface, the revenue numbers from the New Jersey Division of Gaming Enforcement look robust. Second-quarter results show net casino revenue up 18 percent for April, May, and June. This sounds like great news for the casinos. However, the casinos also reported their operating profits were down in Quarter Two, to $159.3 million. This is a decline of 6.8 percent.

Experts also point to the second-quarter results when compared with the first-quarter results. When you take both Q1 and Q2 results together, the revenue shows a rise of 17.8 percent to $1.51 billion. Casino profits were down 16.8 percent at $245.1 million. There was also a huge decline in the first quarter of the profit margins. The first quarter saw declines of 29.6 percent in the casinos’ profit margins.

The Giants Swallowing the Profits

The two newest properties were only open for a few days of the second quarter last year. Therefore, experts didn’t measure the profits for the Hard Rock Atlantic City and the Ocean Casino Resort. However, the seven other casinos didn’t see profitability during these two quarters, when compared with the two quarters last year.

Borgata

What is interesting about the figures is the profitability of one casino in particular. The Borgata casino is not one of the newer casinos. It has been open since 2003. However, despite stiff competition from the newer casinos, the Borgata has continued to thrive. In fact, the Borgata represented a quarter of the revenue for all casinos at $202 million. The Borgata has continued to prosper in the cutthroat casino industry in Atlantic City. One of the reasons for its success is its reputation as a place to play poker. The Borgata has continued to embrace this reputation, offering top-shelf service to its poker clients. The sumptuous poker rooms and poker tournaments have continued to attract players. The Borgata has continued to innovate and expand its poker reach.

The Not so Rosy Picture for Others

While the Borgata seems to thrive on the competition from the new casinos, others are experiencing a revenue decline. Caesar’s saw an 11 percent decline in revenue. The Golden Nugget also saw a large decline of 10.6 percent. Harrah’s dropped 9 percent. These three casinos also had huge profit declines. Caesar’s profit decreased by 33 percent, the Nugget was down 29 percent, and Harrah’s was down 27 percent. Experts believe that if these casinos are going to return to profitability, there will have to be some changes. The casinos will need to come up with ways to bring customers back. The Borgata has made its name with poker. Other casinos could find a niche as well.

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Thomas McCoy was born in Bethesda, Maryland and studied finance at the Kogod School of Business at American University in Washington D.C. before heading to New York and a job as a forex trader on Wall Street. Successful enough to launch his own, online forex trading platform, Thomas has long had a keen interest in the places where the worlds of finance and technology meet. As a prolific blogger, Thomas considers himself an expert on cryptocurrencies, casino asset restructuring, and emerging technologies set to change the way people do business.