The revenue casinos expected to generate over the last four months is like a desperate poker player’s all-in bluff against a made hand: lost for sure.
That’s the assessment of Joe Lupo, president and CEO of Hard Rock Casino Hotel Atlantic City. “With COVID, there will be a much longer time period before volumes get back to where they were,” he said. “I think you’re going to see declines in casino revenue probably until next spring.”
Lupo gave that forecast in an Aug. 14 interview by Dan Loney on SiriusXM’s Business Radio and Wharton Business Daily. Loney talked separately with four industry executives in a program titled, “The Business of Gaming in a Pandemic.”
Lupo said the COVID shutdown was different than when Atlantic City casinos has had to close due to hurricanes or other bad weather. Those were much shorter and crowds quickly returned to normal. But because of the pandemic, Hard Rock Atlantic City was closed for more than 100 days, from March 16 to July 2.
“We went through dramatic changes to clean the property,” Lupo said.
That included more than 1,000 new air filters, thermal imaging to take customer temperatures, plexiglass barriers at transaction sites, and beefing up the janitorial staff. All employees and customers must wear masks and capacity is reduced to ensure social distancing.
“So far, the (customer) volumes have been better than what we expected,” Lupo said, crediting part of that to cabin fever after weeks of people being cooped up. “Weekend business has been pretty solid. It’s the midweek that we’ve seen a little bit more of a dip in the volumes.”
However, the crowds don’t have the same makeup as pre-pandemic. “We definitely haven’t seen the number of elderly slot players, as an example, as we did last summer. We haven’t been able to book all of our hotel, because of the (state) protocols. It seems like we’re seeing a younger crowd here on the Jersey Shore.”
He said casinos elsewhere have had a similar experience. “That older demographic obviously has more concern with COVID. What we’ve seen in other jurisdictions is that people have to build trust and confidence in the protocols. They try it out once and realize that they do feel safe.”
New Jersey has not yet allowed indoor dining to reopen and smoking on casino floors is banned because of the mask requirement.
Casino patronage might drop after schools reopen, no matter what form classes take, Lupo said. “We’re hoping, obviously, to get a reprieve from that indoor dining (ban). And it’s not just about us. It’s about the entire New Jersey restaurant industry.”
State figures show Hard Rock Atlantic City had $31 million in gross gaming revenue in July: $24.6 million from live slots and table games, $5.6 million from online gaming, and $856,358 from sports betting. For July 2019, the total was $36.7 million: $34.7 million from live gaming, $1.9 million from online, and $153,991 from sports betting.
Statewide, July’s gross gaming revenue was down 20.9 percent from last year, the Division of Gaming Enforcement reported. However, online gaming revenue more than doubled from last year and sports-betting revenue was up by 65 percent.
Lupo said many Hard Rock customers who typically placed sports bets online increased their igaming spending, especially when sports were essentially shut down around the world. “Online gaming will definitely continue to be impactful,” he said. “People are realizing the importance of it.”
But it’s not offsetting the lost revenue from live gaming, he noted.
“iGaming has been one of those things that people feel more comfortable with, and they understand the brands more. I think you’ll continue to see online pick up.”
Lupo said the number of Atlantic City casino customers drops in the fall. “That’s where our seasonality comes into play, so it’ll naturally go down. It’s going to be a challenge, but that’s the new game in town. We do the best we can and speak to our customer base and show them how safe the property is.”
