Fewer people heading to Atlantic City: Will hotels survive?

As the COVID-19 health emergency continues, there is growing concern about New Jersey’s casino industry.

Some casinos are doing better than others since reopening July 2, but with pandemic rules in effect, fewer visitors are going to Atlantic City.

Recent data shows total gaming revenue in Atlantic City is down more than 23% last month compared to what the casinos earned in July 2019.

“We know it was an industry that had troubles even before COVID, and unfortunately the pandemic has not helped sectors that were already being troubled,” said Rutgers University economics professor Bruce Mizrach.

“Leisure time activities, whether it’s hospitality, going to hotels, and then also going to the casino, are all things that Americans have cut back on substantially," he said.

The casino industry employs tens of thousands of employees and is vital of the economy of Atlantic City as well as to the state government's coffers.

Mizrach said social distancing and limited capacity requirements and the ban on indoor dining have had a negative impact on casinos.

“The best customers for these casinos,” he said, “are also customers at their hotels, customers at their restaurants and then, of course, losing money at the casino.”

Even though foot traffic is down in most casinos, many costs at these facilities are fixed.

“The air conditioning has to be on for all the customers, whether it’s on for 25% or 100% of capacity,” Mizrach said.

But there is one bright spot.

“New Jersey happens to actually be a leader in online gaming and one effect of the pandemic has been to shift to online gaming,” Mizrach said.

He said this could mean, depending how long the pandemic lasts, that “some of the casinos, if not their hotels, survive in some kind of online mode in which folks move a lot of their gambling to online settings rather than in person.”

“If the disease continues on its pace,” he said, “it would be quite likely that at least some of these hotels may not be able to survive.”