Operating Loss of $112M for Atlantic City Casinos in 2020 Q2

Atlantic City casinos did not have a good second quarter of the year – for the three-month period of April, May and June, during which casinos were mostly shut down completely since 1978 due to global health crisis, there has been a 170.4% decline in operating profits looking at it annually.

During the time of the mass closure, Atlantic City’s nine casinos only had very limited online sports betting as an option. This resulted in a total loss of $112 million, as the second quarter in 2019 brought in $159 million in gross operating revenue.

Unfair Comparisons

The comparisons, however, are “unreasonable due to the pandemic,” as Casino Control Commission Chairman James Plousis said…

…and said that it is of note that during this period, the casinos not only shut down but also handled the expenses to create a safe environment for players and workers to come back.

“That critical investment enabled the casinos to begin welcoming back visitors with appropriate limits in July, and started Atlantic City on the road to recovery,” he said.

The casinos in Atlantic City closed on March 16th and reopened on July 2nd. That’s 107 days without casino gaming and it is the longest closure in in 42 years of casino industry.

Understandable Outcome

Jane Bokunewisz, coordinator of Lloyd D. Levenson Institute of Gaming, Hospitality and Tourism at Stockton University, said that this huge loss is not surprising…

…given the shutdown which was industry-wide. Room, food and beverage purchasing can be cut by fewer purchases, the rest had to suffer.

She said:

“Casinos incur substantial expenses even when the properties are closed to the public. Utility costs continue in order to keep the buildings climate controlled and some employees, like security, surveillance, and maintenance, remain working on site.Additionally, some casinos continued to pay employee health care benefits and allowed employees to use accrued benefit time during the shutdown.”

A Massive Fall

The quarterly reports show gross operating profit as well as net revenue, hotel occupancy and 3rd party business sales.

Net revenue declined almost 85% in Q2, and this figure includes gaming, hotel, food and beverage as well as other sources of income.

In total, the whole US industry reported a $121 million in net revenue during the three-month period this year. Last year, during the same period, it was $796.8 million!

Source:

“Atlantic City casinos report operating loss of $112 million in second quarter of 2020”, pressofatlanticcity.com, August 25th, 2020.