According to the chief executive of one New Jersey casino, ignoring forthcoming developments in their area could be to their peril. However, the CEO on the record doesn’t believe it’s too late to adjust.
Hard Rock CEO Jim Allen spoke about the threat that downstate New York casinos could pose to their counterparts in Atlantic City. It’s unlikely that Allen was telling his colleagues anything new, though, and the properties on the boardwalk have one legitimate advantage over their forthcoming competition.
Allen talks about the New York threat and the impact on Atlantic City casinos
According to Wayne Parry of the Associated Press, Allen has sounded the alarm for the nine Atlantic City casinos. As many as three eventual casinos in downstate New York could pose a legitimate threat, Allen says.
“Atlantic City receives 20, 30-plus percent of its revenue from upstate New Jersey and downstate New York, and there’s no doubt it is going to have an impact on this particular market,” Allen told Parry.
Further speculating about whether the threat could be serious enough to compel at least one Atlantic City casino to close, Allen stated, “It could happen.” Allen added:
“So, you have three or four that are very strong and then I think there’s a question as to what happens in the next level down. I think it’s a concern that if these other casinos don’t perform, then inevitably from a business standpoint, is there vulnerability? I don’t think that changes unless there’s enhancement to the perception of Atlantic City.”
What Allen discussed has happened before.
The last time an Atlantic City casino failed
Outside of COVID-19 pandemic suspensions, the last time a gaming property in Atlantic City shuttered was in 2014. As Bill Chappell detailed for NPR, an investment of over $2 billion was not enough to keep the Revel Casino Hotel alive.
At that time, market analysts cited new casino openings in Baltimore and Philadelphia as part of the reason for Revel’s failure. Simply put, there were too many casinos in Atlantic City given the investment that visitors were putting into the region.
Another opinion was that Revel’s approach to differentiating itself was ill-fated. Instead of trying to attract gamblers, the Revel marketed itself as a high-end resort where you could gamble as well.
As Parry reported in the Associated Press, that idea persists in some form among the existing Atlantic City properties today. For example, the Borgata has recently announced a major renovation of its hotel tower.
Allen’s warning states that might not be sufficient to stave off another downsizing on the boardwalk. Allen does point to a possible path forward amid downstate New York competition, though.
Allen’s suggestion is to keep Atlantic City at nine
Parry points out that Allen has long thought that people do not see Atlantic City as a desirable destination. Allen believes that for Atlantic City to thrive even after the new casinos open in New York, that will have to change.
Some numbers bare out what Allen highlights. For months, Atlantic City casinos have been stagnant in terms of gambling revenue from people doing their gambling in person. In March, physical poker, slots and table games in New Jersey accounted for $228.6 million in gross revenue.
However, that represents a total that is mostly flat year-over-year. And Ocean Casino Resort accounts for over a third of the overall growth itself in that time according to David Daniz at PlayNJ. At the same time, recognizing the need that Allen points out is an easy task.
Devising a strategy to properly address that need could prove far more difficult for Atlantic City casinos like the Borgata, Hard Rock, and Ocean. Allen believes they need to convince consumers that Atlantic City is a superior location. And that their properties are worth traveling to even when more convenient options might be available.
Swaying minds that way could incorporate efforts beyond what the casinos control. However, if Allen’s speculation is right, Atlantic City has two choices; elevate the city’s status or watch as market contraction plays out.