Atlantic City casinos: Profits plunge due to high employee costs

The gross operating profit of Atlantic City's casinos has recently fallen by around 20%. In the second quarter of this year, the gaming venues generated total revenues of just under USD 800 million. While this represents a 1% increase in revenue, profits have fallen by around a fifth. But what are the reasons why Atlantic City's casinos made so much less money on balance?

The Atlantic City casinos took in a total of around USD 795 million between April and June (2nd quarter). This is equivalent to approximately EUR 732 million. While revenues were almost identical to the same period last year (+1%), gross operating profit fell significantly. In the previous year, earnings before interest, depreciation, amortisation and taxes were just under USD 173 million - in the second quarter of 2023, this figure is only USD 138 million. This represents a decline of around 20%. The figures were published last week by the New Jersey Division of Gaming Enforcement.

Atlantic City Casinos: Revenue remains identical - profit collapses

However, the sudden drop in profits at Atlantic City casinos is not necessarily surprising. Despite high visitor numbers and steady revenues, the casino owners ended up with much less. This is mainly due to the significant increase in personnel costs. In the middle of last year, for example, the casino operators agreed with the union on the largest pay rise in the history of the US state of New Jersey.

Specifically, it was agreed that Atlantic City casino workers could expect a minimum starting wage of $18 per hour. Those who have worked for the casino for at least four years will receive a minimum of $22 per hour - even for cleaning staff. Of course, other operating costs have also risen, especially in recent years, so profits have inevitably fallen.

What about the half-year balance for 2023?

There are currently nine casinos in Atlantic City. These venues generated total revenue of approximately USD 1.5 billion in the first half of 2023. This represents an increase of just under 5% over the same period last year. However, gross operating profit fell by more than 15% over the same period to a current level of USD 259 million. In March 2021, we reported that the Trump Plaza in Atlantic City would be bombed.

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