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The New Jersey gambling industry is booming, but one casino owner in Atlantic City does not believe that upward trend is sustainable.
Tilman Fertitta, who is the owner of the Golden Nugget Atlantic City, told local reporters recently that the NJ gambling market will not be able to sustain constant growth with nine casinos in AC.
Even though the revenue numbers have increased, Fertitta does not foresee a positive future for the Atlantic City gambling market.
“It’s not a nine-casino market, and I don’t understand why nobody realizes that,” Fertitta said.
“You could say that the market is going up and that we’ve added thousands of jobs, but now every other casino has had to lay off jobs, so I don’t even know how big the net gain is. But now, none of the casinos have the cash flow that they did.”
Even with the excellent New Jersey gambling revenue figures over the last year and a half, the Atlantic City casinos have seen a profit decrease in the second quarter of 2019.
With that decrease in the revenue stream, Fertitta believes there will also be a decrease in re-investment into the land-based casinos and because of that a few of the casino properties will eventually have to close down.
There was also a contraction in the New Jersey gambling market between 2014 and 2016, when five casinos closed shop in Atlantic City. With the five closures there were seven casinos in the city rather than 12.
“This is what happened to Atlantic City the first time, and it’s how the casinos got all run down,” Fertitta said.
“People didn’t have the money to keep [their properties] new and fresh by putting money back into it. I think it’s a huge mistake again.
“It’s a seven-casino market, and when it was seven casinos, everybody was putting money back into the properties. Now, they won’t.”
One of the last casinos to close in AC was the Trump Taj Mahal, which boasted one of the most popular poker rooms in the city and was featured in the movie Rounders with Matt Damon and Edward Norton. The Taj Mahal closed in October 2016 and only five months later the Seminole Tribe of Florida bought the property and constructed the Hard Rock Atlantic City.
The Ocean Casino Resort, which was on the site of the old Revel Casino, and the Hard Rock Atlantic City both opened their doors in June 2018. They did so at a time when there was a surge in the market after the legalization of online gambling in New Jersey.
These two newer land-based casinos have bitten into the profits of some of the smaller casinos in Atlantic City. Even during the period of growing revenue, the Golden Nugget Casino has seen a decrease in revenue.
There was a year-on-year revenue decrease in double digits at the Golden Nugget Casino in the months of April, May, and June 2019. In March the casino saw a revenue drop of 9.3% from the previous year. The Tropicana, Bally’s, and Harrah’s also experienced revenue slumps over the same period.
Even with the less than stellar outlook, Fertitta believes the Golden Nugget is safe for the foreseeable future. New Jersey Governor Phil Murphy recently signed a bill that lets the Golden Nugget take bets on NBA games, which was previously a no-go due to Fertitta’s stake in the Houston Rockets.