Atlantic City: Is the coast clear?

By Gambling Insider

Atlantic City, America’s Playground – or at least, it used to be. New Jersey’s premier gaming destination has, ever since Covid-19 started, been in a rough spot. However, Atlantic City is on the road to recovery. Unfortunately for AC, the road has more than a few potholes. But before we examine the bad, let’s take a look at the good.

Revenue is on the rise. For Atlantic City, there are no sweeter five words in the English language. Its nine casino properties, and their online arms, generated nearly $720m in revenue for Q1, a healthy 25% increase over last year. But perhaps more importantly, first quarter revenue exceeded pre-pandemic levels.

Q1 of 2019 saw the city generate $704.6m, meaning 2022 has thus far exceeded comparable pre-Covid levels by a modest but not insignificant 2%. Profits, meanwhile, soared; up 63% when compared to 2021 and 80% when compared to 2019.

However, not all of Atlantic City’s nine casinos shared in this growth. Only Borgata, Hard Rock, Ocean Resort and Tropicana saw their profits exceed pre-pandemic figures. Bally’s AC, meanwhile, posted a loss for Q1, which widened year-on-year to $6.8m from $6.5m. Average hotel occupancy also remains below Q1 2019, at 63% versus 72.6%.

This may be cause for alarm, but visitor levels don’t usually pick up until after Memorial Day Weekend, which marks the unofficial start of summer in the US. Memorial Day is always held on the last Monday of May, creating a three-day weekend and driving an uptick in foot traffic to Atlantic City’s nine casinos. Ahead of this year’s Memorial Day Weekend, which will take place from 28 to 30 May, Atlantic City went into full promotional mode.

Over $1bn has been invested in the city’s casino industry in recent years as AC looks to diversify its offer and attract new visitors with new amenities – and there are few signs that this is slowing down. For example, Ocean has earmarked $85m for property developments, scheduled to get underway this summer. These developments include new hotel rooms and suites, as well as multiple food and drink outlets.

Given the sheer expense of such undertakings, it’s no surprise that Atlantic City would want to draw attention to its shiny new toys. Joe Lupo, President of the Casino Association of New Jersey (CANJ), remarked: “The casino industry is committed to the future of Atlantic City, and through our combined efforts we are revitalising this beautiful destination resort.”

Now let’s take a look at the bad, which mostly revolves around two things: smoking and wages. First up, a coalition of state lawmakers, anti-smoking organisations and disgruntled workers are calling for a ban on smoking in Atlantic City casinos. Meanwhile, Lupo and the CANJ oppose such a measure, arguing that it would negatively impact casinos’ revenue.

Our members are prepared to do whatever it takes to win the raises they need to get by in this economy”Bob McDevitt, Unite Here Local 54 President

Both sides have engaged in a years-long tug of war, but it does seem inevitable that Atlantic City casinos will see their exemption from the Garden State’s Smoke-Free Air Act removed. If Lupo and the CANJ are correct, a ban would hurt casinos’ bottom lines, but opposing it hurts their public image so this may be a lose-lose scenario.

An issue that’s likely weighing more heavily on Lupo’s mind is employee wages. The CANJ and New Jersey’s Division of Gaming Enforcement (DGE) recently invited prospective employees to a job fair at the Atlantic City Convention Center on 2 June.

This came after a union that represents Atlantic City casino workers, Unite Here Local 54, warned of “labour disputes” amid ongoing pay negotiations. Employee contracts at all nine casinos are set to expire on 31 May, and workers are currently negotiating wage increases.

The union claims employees’ pay has not kept pace with casinos’ profits. Bob McDevitt, Local 54 President, said: “Now that the casinos have recovered from the pandemic, it’s time for our members to recover, too.

“The Atlantic City gaming industry was established to create good middle class jobs, and our members are prepared to do whatever it takes to win the raises they need to get by in this economy.

“Visitors to Atlantic City deserve to know the status of our contract negotiations, because when contracts expire, a labour dispute is always possible.”

While labour shortages in the US likely play a role in the city’s recruitment drive, there may well be a connection between the upcoming job fair and Local 54’s call for higher wages.

Ultimately, if Atlantic City can overcome this roadblock, it probably has a bright future ahead. Revenue is rising, profits are, by and large, up – but a casino can’t function without workers. If the city stumbles here, it could suffer a painful setback.

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