Atlantic City casinos released their 2012 year-end financial reports this week. According to the New Jersey Division of Gaming Enforcement, which reviews the casino revenues, profits in all 12 casinos declined for the seventh straight year in 2012. New Jersey Governor Chris Christie recognized the casinos continued to struggle financially, which partially explains his decision to legalize online casinos.
The Atlantic City casinos collectively reported a 27 percent decline in profits last year. Gambling insiders state that the casinos struggled to maintain business throughout the year, and lost an even larger share of revenues in the weeks following Hurricane Sandy. The casinos were forced to close their doors for a whole week immediately following the storm, which significantly depreciated their total revenues.
Atlantic City has struggled to remain competitive over the last few years. New Jersey lawmakers were challenged by their counterparts in other states when casino licenses were granted in other jurisdictions. Casinos in Pennsylvania particularly affected cash flow in Atlantic City. As a result, Pennsylvania usurped New Jersey’s position as the second largest gambling capital in the US, trailing only Nevada.
At least three casinos on the New Jersey boardwalk are close to bankruptcy – the Revel casino formally entered Chapter 11 in March. The Atlantic Club is another casino struggling to retain profits and market share, but could turn itself around if an investment proposal from PokerStars is approved by the New Jersey regulatory council.
The New Jersey government recognized that the casinos aren’t the same tourist-oriented destinations they once were, which contributed to the legislature’s decision to legalize online gambling. The online gambling law allows internet sites to house their servers within Atlantic City casinos, and provide New Jersey residents with legal access to online casinos. Governor Christie negotiated a revenue sharing agreement within the law to provide financial support for the ailing casinos on the boardwalk.
Atlantic City must adapt to the times to remain viable in a market that has now transitioned into one of convenience rather than entertainment.
