Are There Signs of Recovery in Atlantic City? By Ken Adams, CDC Gaming Reports December 20, 2018 at 8:47 pm The casinos in Atlantic City are having the best year they have had in ten years and some people are beginning to speculate the city is back on the road to prosperity. For the first ten months of 2018, the casino win is $2.387 billion, up 5.76 percent from 2017. There are good reasons for increases; Atlantic City has now has online gambling, two new casinos and sports betting. Online gaming in particular has added significant revenue each month for four years and it has grown each month over the previous year. In November internet gaming was up 30.7 percent to $26.9 million. That is more than any single casino, except Borgata. Sports betting has been legal for six months. In November, it generated $11.5 million in win for the casinos. For the month, casino revenue was up 12.6 percent to $209.1 million. The increase is due to $33 million from the newly opened Hard Rock and Ocean Resort casinos. The revenue growth comes after a long decline, but it has a long way to go to reach pre-Pennsylvania and pre-recession numbers. In November 2006, the casino win from the 12 operating casinos was 406.1 million; in 2018, not counting sports or online gaming, the nine operating casinos generated $209.2 million, a very long way from 2006. Atlantic City appears be in recovery, but that road is not a certain one and it is littered with landmines.The landmines are, as everyone knows by now, competition from other states. Since 2006, Pennsylvania has added 12 casinos. After twelve years, Atlantic City should have absorbed that competition. It might have, if it were not for the new casinos in New York, Maryland and Massachusetts. Even that added competition could be eventually absorbed if the expansion stopped, but it won’t. Pennsylvania recently authorized 10 new mini-casinos with 750 slot machines and 30 table games each. Those mini-casinos are still two years or more down the road, but sports betting is in the immediate future. Hollywood Casino sports book is open and booked $1.4 million in bets in its first two weeks in November. Sugar House Casino in Philadelphia and Rivers in Pittsburgh started booking sports in December, but have not yet reported revenue. When all of the casinos and min-casinos in Pennsylvania have sports betting, it is bound to have a significant impact on sports betting in New Jersey. The Keystone state has also had fantasy sports betting for six months. In November it generated $3.24 million in revenue. There is one more big shoe yet to drop-slot machines in truck stops. Thus far over 60 truck stops have applied for a gaming license that will allow five machines at each stop. Pennsylvania is on the verge of its largest expansion since authorizing slot machines and Atlantic City will feel the impact of this expansion for years to come. It is a sign of our times. The Great Recession hit the casino industry everywhere, and except for Las Vegas, few jurisdictions have fully recovered. They are not recovering for several reasons. Mississippi, Louisiana and Indiana have been hit by major weather events that exacerbated the affects of the recession and several states have passed non-smoking regulations. But of course, the major factor everywhere is additional competition. Since the beginning of the recession, five major states have added casinos and VLTs. And there is more expansion to come; Virginia, Arkansas and Texas are moving toward casinos, and eight states have added sports betting. All of that means that Atlantic City is probably not on its way to a major recovery and certainly not on the road to the prosperity of 2005 and before. The city does however have a brief time to gather in the wheat while the sun shines. The rollout of mini-casinos, sports betting and VLTs in truck stops in Pennsylvania will take time. But when it is completed, Atlantic City’s potential market will have been diminished dramatically once again. Atlantic City’s narrative is the national narrative in miniature. Nationally, gaming revenue was up over five percent in October, but nearly all of the growth was the result of expanded capacity. There were more casinos and more VLTs in 2018 than 2017. The resulting increase in revenue does not necessarily equate to more revenue for the casinos that were operating in 2017. In fact in most cases it means less. New casinos take at least part of their revenue from existing ones, just as the two new casinos in Atlantic City cannibalized that market. In November only one of the existing casinos reported more win in 2018 than 2017. The rest gave up some of their customers to the Hard Rock and Ocean Resort casinos.. It will take a long time before the national picture of the gaming industry stabilizes. It may be possible by 2025 to make definitive statements about any jurisdiction. All of the new gaming options should have been absorbed by then; that is if there is no war, recession or major natural disaster. Predicting the future of any jurisdiction is rather like forecasting weather; tomorrow is pretty easy to anticipate, a month into the future is rather obscure and a year becomes a guess. A decade from now is the stuff of crystal balls and court jesters. With that said, things look pretty good for Atlantic City in December and probably for most of 2019 and possibly even 2020. Is that a sign of recovery or just a sign post on a very long and treacherous road?