Tag Archives: bailout

Revel’s rise almost didn’t happen

April 11, 2012 10:30 am

The new Revel casino in Atlantic City is just opening but it already has an interesting history. The $2.2 billion casino was left for dead after the financial collapse in 2008. Construction resumed after getting a state bailout from Gov. Christie. Now Atlantic City hopes the Revel can revive its sagging gambling fortunes.

The Revel’s revival is detailed here in a piece by the Business Insider. Perhaps the most interesting quote is this one from Revel CEO Kevin DeSanctis before the Revel was built: “As far as I’m concerned the last thing this place needs is another casino,” he said. “If we’re just going to build a casino, let’s not waste our time on this. It’s not going to be productive.”

DeSanctis was explaining why the Revel is trying to broaden the gambling market by going after high-end customers who want dining and entertainment as well as a casino. The Revel is also the first casino to try to capitalize on its location at the Jersey Shore. The casino is open and airy and has windows that look out at the Atlantic Ocean.

By comparison, the other Atlantic City casinos are dark and windowless. They don’t want gamblers wasting time on the beach when they could be wasting time and their money in the casino. But it remains to be seen if the Revel’s design will reshape the faltering Atlantic City gambling market. Competition and convenience is killing AC. The Revel may bring in a few new visitors, but it’s hard to see how an ocean view will be a game-changer.

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Even Beyonce can’t save Atlantic City

March 21, 2012 1:58 pm

Atlantic City backers hope the opening next month of a new $2.4 billion casino – with a live performance by Beyonce – will give the struggling Jersey Shore town a much-needed shot in the arm. But the reality is the new casino could be Atlantic City’s last gasp. That is the case I make in this piece for Philadelphia Magazine.

Atlantic City has been hammered by the opening of casinos in Pennsylvania. More competition looming in New York could well provide a knock-out punch. Then again, Atlantic City has never lived up to its hype. After 30 plus years of casinos, the town is pretty much a dump.

The opening of the upscale Revel casino is likely to take business away from other A.C. casinos, rather than attract new gamblers. One casino has elected to not even try to compete, and is instead going downmarket to attract low rollers with cheap rooms, penny slots with higher payouts and $1 table games.

Turns out, I’m not the only that feels A.C. is in trouble. Wall Street investors are avoiding casino bonds because they believe there is a glut of casinos, and the opening of the Revel will hurt other Atlantic City casinos. In fact, investors walked away from the Revel when it was being built. It needed a state bailout from Gov. Christie to finish being built.

That’s a good indication the private market knows something Christie doesn’t. Then again Christie is playing with taxpayers’ money. It’s easier to make risky bets with other people’s money.

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Christie’s casino contradiction

March 5, 2012 1:21 pm

Just days after Gov. Chris Christie declared March Problem Gambling Awareness Month, casino regulators decided to bend the rules and allow the new Revel casino in Atlantic City can open with a larger gambling floor than is allowed.

So on the one hand, Christie is urging residents to be on the lookout for problem gamblers that casinos and lotteries help to create. While on the other hand, state officials are bending over backwards to enable a casino to lure even more gamblers than the rules allow. Not to mention, Christie is also supporting a bill to legalize sports betting to lure more gamblers to Atlantic City, while he is urging help for problem gamblers.

Something is seriously wrong with this picture.

That is the inherent conflict of a state policy that supports, promotes and partners with casino operators and lottery officials, and then has to pay for the increased social costs that come from gambling, such as increased bankruptcy, crime and suicide. The gambling industry will say the percentage of problem gamblers is small. But that number is misleading since it includes the entire population. The real question is how many regular casino customers are problem gamblers? Indeed, studies show that a large percentage of casino customers are problem gamblers. As states push more gambling options, the number of problem gamblers will likely increase.

In the case of New Jersey, March is problem gambling month but the Revel casino doesn’t open in April. So the problem gamblers can get help this month before heading to the new casino in Atlantic City that Christie helped build with a taxpayer bailout. And people wonder why government is so screwed up.

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Tax breaks for casinos

February 6, 2012 10:45 am

The insatiable drive for tax revenue is one of the main reasons many states are turning to casinos as a way to fill government coffers. But once the casinos begin to struggle they immediately turn to lawmakers for help.

In West Virginia, the city council  in Longview just approved a one-year tax break in an effort to keep the struggling casino afloat. Once the tax revenue goes away, what is the point of having a casino if all it does is create economic and social costs?The troubles in Longview offer a window into what other towns and cities can expect as more casinos open and the competition for limited gambling dollars increases.

Consider: The two mega casinos on Indian reservations in Connecticut are scrambling to refinance crushing debt loads, and will soon face increased competition from Massachusetts and possibly New York. Several casinos in Atlantic City filed for bankruptcy in recent years and continue to struggle, in part from increased competition in Pennsylvania. Meanwhile, the Revel casino needed a state bailout in order to resume construction.

Casinos in Indiana, Mississippi and other states are also experiencing a drop in revenues, in part from the sluggish economy and increased competition. In Delaware, the governor has ditched a plan to add more casinos as the existing casinos lobby state lawmakers to reduce their tax rate. 

Meanwhile, other states like Ohio, Kentucky and Florida have or are considering legalizing commercial casinos, which will further increase competition. As the casino cancer spreads, look for more states to cut taxes and cut back on regulation – as New Jersey has done – in an effort to prop up the increasingly influential casino industry.

The Longview casino claims it has not made a profit since 2008. Meanwhile, the casino continues to strip wealth from the community. And now the government is extending the casino a tax break so it can continue to take money from residents. There is something seriously wrong with that picture. It shows why casinos are such a bad public policy that is insidious and unsustainable.

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The casino Gov. Christie built

January 4, 2012 9:15 am

The New York Times details the latest attempt to save Atlantic City: a new casino that Gov. Christie helped build thanks to $261 million in state tax credits.

The state bailout of the $2.4 billion Revel casino came after private investors walked away from the half-built project. As Atlantic City’s gambling fortunes continued to decline, Morgan Stanley had decided to walk away and a $1.4 billion loss rather than keep plowing money into the casino. Then Christie stepped in with the state bailout.

To recap: New Jersey legalized casinos three decades ago to generate tax revenue and to save Atlantic City. Now the state has decided to plow hundreds of millions of dollars into a private business in order to prop up its struggling gambling industry. Oh yeah, and more than 30 years later, Atlantic City remains mostly a dump.

Now the state is throwing more good money after bad. This, in a nutshell, demonstrates the failed policies of casino gambling.

“There was a reason that the private sector wasn’t stepping up. If they believed there was an opportunity to make money, they would have funded this.”  Deborah Howlett, the president f New Jersey Policy Perspective, an advocacy group that opposes state financing told The Times.

This sad story gets worse (as detailed in a blog post last month). The other big reason states tout casinos is for the jobs they create. Indeed, the Revel project is expected to create 2,600 construction jobs and 5,500 permanent jobs. But here’s the catch as detailed in The Times: “Many of the jobs, however, particularly positions like dealers, waiters and cocktail waitresses, will have four- to six-year terms, requiring employees reapply for their own jobs at the end of the term. No other casino has a similar hiring policy, according to Local 54, the union that represents Atlantic City hospitality workers.

“These are the jobs you’re creating?” said Mr. C. Robert McDevitt, president of Local 54. “People aren’t able to plan their future in four-year bites. It’s just unconscionable.”

 

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About those great casino jobs (part II)

December 13, 2011 10:12 am

We did a post yesterday about the low pay for many of the casino jobs that elected officials like to tout as a reason to legalize gambling. But then along comes a report in The Press of Atlantic City today that says the new Revel casino wants to limit the number of years people can work jobs as card dealers and wait staff.

The casino – which received a huge taxpayer bailout from Gov. Christie – is telling workers they can only stay in the job for a few years. Essentially, Revel is placing term limits on the jobs. Of course, the unstated reason behind the move is to keep down costs and ensure a steady flow of new, young employees to fill the jobs. Younger bodies tend to look better in the skimpy costumes that many female cocktail waitresses and blackjack dealers are forced to wear.

Indeed, nine waitresses sued the Resorts casino in Atlantic City earlier this year for age discrimination, alleging they were fired because they couldn’t fit in the new flapper costumes.

At Revel, the unions are balking and arguing the provision is a form of age discrimination. It’s also another example of how the casino jobs are not all they are cracked up to be. Indeed, many of the casino salaries of around $30,000 are not enough to raise a family, so are hardly worth the economic or social problems that come with gambling.

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