Bally’s in Atlantic City is changing hands. Again. Twin River Worldwide Holdings purchased it last month from the newly minted Caesars, which was forced to offload some of its assets in Atlantic City to received regulatory approval for its merger with Eldorado Resorts. Bally’s should have always been a success; after all, it sits on the second most prestigious address in Monopoly. If you could build a hotel on Park Place in Monopoly, you had a good chance of winning the game. In the real Boardwalk World, things are not that simple -at least, not since Pennsylvania authorized slot machines and, later, table games at racetracks and casinos. The enabling legislation passed in 2004, and by 2007, Pennsylvania slot machines had eroded fifty percent of the revenue of Atlantic City’s casinos. By 2016, five of Atlantic City’s twelve casinos had closed. Two of those casinos have since reopened under different names and ownership, and the city’s remaining casinos have been bolstered by online gambling and sports betting. But operating a casino in Atlantic City is still a challenge.
Twin River is not going to remain Twin River. It is, instead, taking on the Bally’s name. In the final licensing hearing, the management of Twin River spoke with reverence of the history of the Bally’s. “The sixth floor of Bally’s was the place to see and be seen,” Twin River attorney Lloyd Levenson said. The company promised the regulators that they would bring back Bally’s former brilliance. The statement was met with vocal approval from the commission.
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“I am pleased to hear that Twin River is committed to Bally’s success,” said New Jersey Casino Control Commission chairman James T. Plousis. “This once-grand property will be restored, renovated and upgraded to become an integral and competitive part of the gaming industry in Atlantic City,” commissioner Alisa Cooper added. Twin Rivers may be very successful in Atlantic City, but it will not be easy; as of October, Bally’s has generated $83.3 million in casino revenue, for a 3.9 percent market share.
This is not the 1980s, when Atlantic City and Bally’s had no competition within a thousand miles. In those years, Atlantic City revenues grew consistently year over year, operators were confident, and regulators were complacent, certain that their success was due to superiority of the city, its operators and gaming regulations. The truth was far different: the marketplace was stagnant, taxes and regulations kept operators from reinvesting and updating their properties. Image if Las Vegas casinos had stood still between 1980 and 2000. Nearly impossible to do. Las Vegas, however, had an advantage: a regulatory structure that did not stifle innovation. Las Vegas did not have any more or less external competition than Atlantic City, but the internal competition was intense. That competitive pressure forced all operators to reinvest and innovate.
Regulations in Atlantic City did not allow for the innovation that was seen in Las Vegas. Atlantic City’s regulations dictated the way not only that the gaming space was used but also the amount of space required to be allocated to other purposes, like conventions and open public spaces. Thus, when the gaming expansion that began with Pennsylvania in 2004 got underway, Atlantic City was unable to respond, and the town rapidly became a city of broken dreams. Yet it seems it is always possible to find someone who thinks it is possible to recreate the magic. They buy a tired, underperforming, or closed property, wave a magic wand of money over it, and expect to resurrect not just that property but the city as well. It hasn’t happened yet. Ocean City, Hard Rock, and Golden Nugget would still be marginal, or failing outright, if not for online gambling and sports betting. Online gambling is very successful in New Jersey and so is sporting betting, the majority of which is also done online. But neither sports nor the Internet have reinvented Atlantic City and brought back the glory days. They didn’t and haven’t because nothing can.
If Twin River wants to be a success, it has to give Bally’s an online presence equal to those of the Golden Nugget, Resorts, and Borgata. Truthfully, that is probably the real plan, although the company did not emphasize that element of its strategy during the licensing hearing. Twin River has been on a buying spree recently and will now have 14 casinos in 10 states. In embracing the Bally’s name and brand, Twin River CEO George Papanier said, “The Bally’s brand is core to our drive to become the first omni-channel gaming company (that will) seamlessly integrate and operate physical casinos with digital solutions, to take advantage of the incredible growth potential that an online future offers.”
Twin River is not alone in planning to blend land-based casino licenses with a national online brand. Wynn Resorts, Penn National, MGM, and Caesars are all moving quickly to establish a viable national online/sports betting hybrid brand. If the pandemic has taught the gaming industry anything, it is the importance of going online. Year to date in Atlantic City, the brick-and-mortar casinos have generated $1.218 billion, with online revenues at $779.0 million and sports betting $114.9 million. Resorts and Golden Nugget are the current poster children for online wagering; their online gaming generates four times as much revenue as brick-and-mortar. The margins for online revenue are also much higher than for brick-and-mortar casinos. Going online in any state where it is permitted is a no-brainer.
Optimistic platitudes aside, it is doubtful that Twin River can make Bally’s the place to be seen once more. Borgata dominates that market, with nearly twice the revenue of any other casino in town. In fact, without online gambling and sports, one could make an argument that buying any old casino in Atlantic City was a bad idea, regardless of the price. Bally’s was cheap, but even at the lowest price the property will likely prove to not worth the time or effort. However, when you consider the casino license itself is a ticket to ride the online express, it was a very good buy. The only question now is if Twin River can make an online Bally’s the place to play and be seen.
