Editorial: At last, some blue skies over Atlantic City’s casinos
As five Atlantic City casinos closed from 2014 to 2016, analysts — at least those not intent on writing the resort’s obituary — postulated that the industry was simply “right-sizing” itself. That now appears to be true.
Second-quarter financial reports released last week by the state Division of Gaming Enforcement show that, for the third consecutive quarter, gross operating profits at the remaining seven casinos have shown double-digit growth. Gross operating profit over the latest quarter, which ended in June, was 16.2 percent more than in the second quarter of 2016.
Furthermore, year-to-date figures show that gross operating profit in the first six months of 2017 is up 20.1 percent, even without the Trump Taj Mahal, which closed in October 2016.
As the DGE notes in its quarterly profit reports, gross operating profit — which reflects earnings before interest, taxes, depreciation, amortization, charges from affiliates and other miscellaneous items — is a widely accepted measure of profitability in the Atlantic City gaming industry.
The success of the Atlantic City casino industry is not just a local, South Jersey concern. Casino taxes are a critical part of the state’s revenue stream. In an earlier report on casino revenue figures for July, the DGE noted that total gaming taxes amounted to $20.8 million for that one month. Casinos pay an 8 percent tax on casino revenue and a 15 percent tax on internet gaming revenue.
Internet gambling, which has not been as successful as supporters initially projected, has nevertheless shown steady growth and is becoming a significant part of both casino revenue and the tax-revenue stream that Atlantic City sends north to Trenton. According to the DGE, online gambling generated more than $3 million in tax revenue in July and a total of $108 million in taxes since it began in New Jersey in late 2013.
All of this, of course, is good news. Certainly, Atlantic City is still struggling in many ways. And if, in fact, the casino industry is now right-sized with seven casino-hotels, that will pose a significant challenge to North Jersey developers Jack Morris and Joe Jingoli, who have partnered with Hard Rock International to reopen the former Taj Mahal.
They are going to have to make a bigger pie, not just steal market share from the other casinos. But Morris, Jingoli and Hard Rock know that and are well-suited to pull off that feat. They plan an entertainment-centered complex designed to draw offseason and midweek crowds.
All in all, the Atlantic City casino industry is clearly moving in the right direction these days. And that benefits everyone in New Jersey.