How did changing Atlantic City regulations, gaming trends, and tourism patterns contribute to the casinos’ downfall?
Executive summary
Atlantic City’s casinos have seen shrinking revenue and profits in recent years as competition, shifting regulation, and changing tourism patterns combine to compress margins: net revenue fell 5.1% in Q1 2025 to $730.3 million and operating profits dropped more than 15% year‑over‑year for that quarter [1] [2]. At the same time, year‑over‑year net revenue for 2024 and early 2025 was essentially flat to slightly down, while occupancy and guest spend softened—signs that structural forces, not a single event, are driving strain [3] [1] [4].
1. A crowded regional market ate Atlantic City’s monopoly
Atlantic City’s decline began when neighboring states licensed casinos; the city’s post‑2006 fall was largely driven by Pennsylvania and New York opening competitive facilities, cutting Atlantic City’s market share and revenue growth that had been uninterrupted until competitors emerged [5]. More recently, New York City’s authorization of major casino projects and three downstate developments worth billions threatens to siphon tourists and regional play that once flowed to the Jersey shore [6] [7]. Local analysts and academics warn those projects could divert discretionary spending unless Atlantic City differentiates its product [8].
2. Regulation shifted the battlefield from slot floors to state capitals and phones
The regulatory landscape evolved from protecting a concentrated boardwalk gaming cluster to permitting expansive, state‑level options: racetrack slot and resort licensing, online partnerships, and mobile sports betting have redistributed customers across jurisdictions and channels [6] [9]. New Jersey legalized and partnered its legacy casinos with online platforms, which preserved some revenue but also normalized play away from physical floors—dampening the boardwalk’s advantage and altering how regulators and lawmakers weigh taxes and subsidies [9]. Proposals to allow slots at racetracks or redirect tax revenue to shore casinos expose the political tug‑of‑war reshaping the industry [6].
3. Gaming trends: online and diversified products changed player behavior
Industry reporting shows the rise of iGaming and mobile sports betting has outpaced brick‑and‑mortar growth in off‑seasons, with online verticals topping retail in some months and contributing to a flatter retail casino revenue profile [3] [10]. Atlantic City’s total net revenue remained around past levels but profits eroded — a classic sign that volume shifted to lower‑margin channels or that rising costs and changing spend patterns (more on non‑gaming experiences) sapped profitability [11] [1].
4. Tourism patterns: fewer big‑spend visitors, weaker occupancy and guest spend
DGE data cited in reporting show Q1 2025 hotel occupancy at 62.9% — down 1.9 percentage points — and lower guest spend, contributing to a 5.1% decline in net revenue and sharper drops in operating profit [1] [4]. Summers or marquee events have buoyed totals in specific months, but seasonality plus an evolving traveler who seeks “experiences” over pure gambling has pressured legacy casino economics and left the boardwalk scrambling to add non‑gaming attractions [5] [9].
5. Profit squeeze: flat revenues but rising costs and declining GOP
Multiple outlets report that while net revenues in some periods were roughly level, gross operating profit and operating profits fell significantly — more than 15% in Q1 2025 and nearly 9% profit declines across 2024 for the industry — indicating margins are being compressed by higher expenses, competitive discounting, and changed spend per visitor [2] [12] [1]. Casinos remain profitable in aggregate, but the falling GOP underscores vulnerability if competition intensifies or costs continue rising [11].
6. Policy and politics matter—and can be double‑edged
State decisions that once protected Atlantic City now present a dilemma: allowing slots at racetracks or expanding downstream licenses can bring statewide tax revenue but directly undercut the shore’s business [6]. The 2016 state takeover and ongoing debates about fiscal stewardship show how governance and local fiscal health intersect with gaming policy; structural fixes require aligning regulation, tax policy, and city redevelopment plans [13].
7. Paths forward: diversification, experience economy, and strategic positioning
Industry observers encourage Atlantic City to lean into non‑gaming attractions, redevelopment projects, and a clear value proposition versus nearby big‑city casinos—suggestions that appear repeatedly in reporting about planned Orange Loop projects and calls for a new tourism strategy [5] [8] [9]. Available sources do not mention specific federal interventions or private‑equity rescue plans; reporting centers on state policy, market competition, and local development as levers for recovery.
Limitations: this analysis draws only on the provided reporting; it does not include internal casino financials beyond DGE summaries, nor does it account for developments after the cited pieces (p1_s1–[6]3). Competing perspectives exist in the sources: some industry voices describe a coming “renaissance” and point to investment and online revenue as stabilizers, while regulators and academics emphasize ongoing margin pressures and competitive threats [4] [5] [11].