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New Jersey casinos’ operating profits down by 46% in Q4 alone
No doubt that the financial crisis and economic recession in the U.S. Wrecks havoc in the 11 casinos and resorts within Atlantic City. The Q4 report by the New Jersey Casino Control Commission released this week confirmed that the city’s casinos are suffering from reduced revenues derived mainly from food, lodging and other amenities aggravated by significant reductions in gambling revenue as well.
Gross revenues for the last quarter were down almost 15% to US$951.60 million only compared with the 2007 comparable quarter. Worse, gross operating profits reached US$131.90 million only which is 54.20% off the US$243.50 million the casinos generated during 2007 last quarter.
The 2008 full-year operating profits reach US$941 only which off by nearly 25% from the previous year while gross revenues slid by 7% to only US$4.48 billion. This is certainly bad considering that the fourth quarter is usually the best quarter of any year given the Christmas and New Year holidays.
The gaming industry considers gross operating profits a better measure than casino net income because accounting for interest, taxes, depreciation and other one-time or recurring charges distorts results of income among casino properties.
Gross operating profits, which represent earnings before accounting for interest, taxes, depreciation and other charges, is considered a better comparison among casino properties than net income. Overall, the resort city gave up more than US$900 for the last quarter alone and US$1.50 billion for the entire year.
The chairwoman of the commission, Ms. Linda M. Kassekert, said a confluence of the negative effects of the recession and increased competition from newer casinos and slot machine parlours in nearby states contributed to the decline. Efforts to attract more customers with a combination of exciting night life and high-end dining digs did not produce the expected results either.
Linda M. Kassekert, chairwoman of the commission, said the industry’s problems come from a combination of the recession and ramped-up competition from casinos and slot parlours in neighboring states….and the state’s push to attract more customers with nightlife and high-end dining did not deliver the results hoped for.