Online betting may have helped Atlantic City, but COVID-19 is still crushing casinos

Dustin Racioppi

| Trenton Bureau

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Raw video: Casinos open in Atlantic City

Casinos open in Atlantic City on Thursday, July 2, 2020, for the first time since closing due to the Covid-19 crisis.

Michael Karas, NorthJersey

Atlantic City’s casinos were on a path toward stability before COVID-19 reached New Jersey and put the famed resort town into yet another downward financial spiral.

Three months of forced closures. A 10 p.m. curfew at odds with the late-night DNA of the casinos. Upscale dinners consigned to room service-only.

And there are still capacity limits crushing core elements of their business model, like hosting conventions and live performances.

The casinos, though, have benefited from nearly $1 billion in online bets in December alone.

in fact, online gaming and sports betting pulled in over $6 billion in 2020, a reliable revenue stream even in a pandemic that propped up the sagging bottom lines of casinos.

“Without online gaming, it would be a total disaster,” said Jim Kennedy, a former executive director of the state Casino Reinvestment and Development Authority.

Still, the headline-grabbing numbers of online betting’s success during the pandemic — the state surpassed Nevada for tops in sports betting — obscures the reality that the casinos are struggling, which has in turn taken a toll on a local economy heavily dependent on their success.

Gross revenue at the so-called brick-and-mortar casinos was down almost 44% in 2020, according to the Division of Gaming Enforcement.

When internet gaming and sports wagering is considered, revenues were down 17%, ending the year at nearly $2.9 billion, according to the division.

Even though online betting had a big year, the casinos split unknown portions of those revenues with third-party vendors like DraftKings and FanDuel.

“There’s this perception that Atlantic City is doing much better than it really is,” said Joe Lupo, president of Hard Rock Hotel and Casino.

“There’s a lot of money going to those online” vendors, he added. “It’s all very positive news about online and the upward trend, as it should be. But there’s a reporting issue of how much is really going to the casinos and how much is going to the third parties.”

The state gaming agency said that in many cases the revenue agreements between casinos and online vendors are not based on a percentage sharing of gross revenues and often have different terms and calculations unrelated to the law the agency follows to publish financial data.

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Sports betting advantage, but not a fix

New Jersey has an advantage over most states, evidenced by surpassing Nevada as the national leader in sports betting with a total handle of $6 billion in 2020 compared to $4.3 billion for Nevada.

New Jersey’s U.S. Supreme Court victory in 2018 that allowed sports betting in all 50 states gave it an additional source of income that helped casinos still rebounding from drastic revenue losses during and after the Great Recession.

It was certainly needed after casinos revenues dropped by half as the economy cratered and competition built up in nearby states. Sports betting in New Jersey started in June 2018.

Sports betting, combined with online casino gaming that was legalized in 2013, has helped bring in more money in recent years, and in 2019 the industry in New Jersey hit more $3 billion in revenues for the first time since 2012.

The diversity of options has meant casinos won’t “just live and die on brick and mortar,” said John Brennan, senior analyst at, a trade publication.

“They can’t be made whole by any of these alternatives,” he said, “but certainly it helps to keep them in business.”

The overall revenue slide in 2020 has had an effect on the Atlantic City area’s economy: Unemployment was 12% in December, according to the U.S. Bureau of Labor Statistics, well above the state rate of 7.6%.

As of Dec. 1, casino employment alone was down 19% year-over-year, with 5,051 fewer jobs, said Jane Bokunewicz, coordinator at The Lloyd D. Levenson Institute of Gaming, Hospitality & Tourism at Stockton University.

“The inability to host conventions and special events because of COVID-19 has also been a factor negatively impacting the city in the short run,” Bokunewicz said.

“This is an important business sector, especially in the winter and (colder) seasons. A decline in demand for services such as catering and equipment rental has a watershed effect on those businesses and their employees as well.”

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What the future holds

Early indications in a survey the institute is conducting show Atlantic City seeing a “rapid recovery,” she said.

Other analysts expect there will be pent-up demand after a year or more of restrictions, giving the casinos a significant revenue boost that, along with online betting, could get them on secure footing.

Casey Clark, a senior vice president for the American Gaming Association, said “there is every reason to believe that Americans will return to casino properties in Atlantic City” when restrictions are lifted and it is safe to do so.

There are signs of it now. Ohio and Mississippi, for example, have already recorded months of year-over-year gaming revenue growth since reopening last year, Clark said.

It’s unclear when that will happen in New Jersey, though, with the slow rollout of the vaccine and variants of the coronavirus potentially extending the pandemic.

Lupo at the Hard Rock said that while he is “very encouraged” about the prospects for the future, he doesn’t anticipate getting back to normal until 2022.

Kennedy, the former Casino Reinvestment Development Authority director, pointed back to the last pandemic as a predictor of the future of Atlantic City.

Looking at pictures after the Spanish flu a century ago, he said the city’s boardwalk was packed with people.

There is no reason to believe that won’t happen again after COVID.

“Atlantic City is always skating on the edge of disaster,” he said.

“It’s never really quite right, but it’s never quite out of it.”

Dustin Racioppi is a reporter in the New Jersey Statehouse. For unlimited access to his work covering New Jersey’s governor and political power structure, please subscribe or activate your digital account today.

Email: [email protected]

Twitter: @dracioppi

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