The one sure bet in Atlantic City the last 10 months was that the new $2.6. billion Revel casinos was likely to go bankrupt. Well, that bad bet just came true.
There was a reason why Morgan Stanley and other private investors walked away from the half-built casino after the 2008 financial collapse. Given the state of Atlantic City’s faltering casino industry, the Wall Street investors determined it was cheaper to cut their sizable losses and walk away from the Revel.
But Gov. Christie stepped in with $300 million in taxpayer money to get the casino up and running. Can you say bailout? Flush with house money, Revel rolled the dice.
From the start, the casino failed to attract the repeat gamblers needed to keep the slot machines spinning. Atlantic City is a mostly low-rollers market, supported by working class and elderly gamblers who spend hours at the slot machines. (Think Jersey Housewives, Sopranos and lots of senior citizens buses.)
The Revel tried to be an upscale casino that doesn’t allow smoking. But there aren’t enough James Bond types in Atlantic City to support the casino. Not to mention, the increased casino competition from Pennsylvania, Delaware, Maryland and the racino in Queens, N.Y. With gasoline back near $4 a gallon, there is no need to trek to dumpy Atlantic City when there are plenty of dumpy casinos closer to home. In fact, the growing glut of casinos raises questions about the whether the region is oversaturated and can support more casinos.
Other states will likely press on with their casino expansion plans, paving the way for more competition and more casinos going under. In the end, the big losers at the Revel will be the New Jersey taxpayers that Gov. Christie put on the hook for the $300 million in state funding.
Tags: Atlantic City, bailout, bankrupt, casino, Gov. Christie, low rollers, Morgan Stanley, Revel, Wall Street
Analysts are predicting that Hurricane Sandy will likely deliver a knockout blow to the Revel casino in Atlantic City.
The $2.4 billion casino has struggled mightily since it opened last spring. After just four months, the casino asked lenders for $100 million to pay its bills and some speculated then that it would be headed for bankruptcy. Now analysts don’t expect the casino to recover from Hurricane Sandy.
The hurricane forced the casino to close for several days and many gamblers have not returned to Atlantic City. About 50 percent of Atlantic City’s gamblers come from New York and North Jersey, two areas hardest hit by the storm. They are too busy rebuilding and don’t have the time or money to gamble.
But don’t blame Mother Nature. The problems with the Revel were known and real well before Sandy barrelled through Atlantic City. The hurricane just hastened the casino’s demise. Private investors cut their losses and walked away from the casino when it was still under construction. The market had spoken. But Gov. Chris Christie came along and gave the casino a bailout. Now taxpayers are on the hook for a casino that - just like most gamblers – never had chance to make any money.
Tags: Atlantic City, bailout, casino, Gov. Christie, Hurricane Sandy, Revel
More than a week after Hurricane Sandy hit the Jersey Shore, the casinos in Atlantic City are still suffering from the storm’s aftermath.
Gov. Christie ordered the casinos closed before the storm hit. Once the storm passed, the casinos were quick to reopen. But many of the gamblers have yet to return, The Inquirer reports.
A large chunk of Atlantic City’s gamblers come from North Jersey and New York – two areas hardest hit by the storm. As such, the casinos are largely empty. Moody’s issued a bleak report for the Atlantic City casinos in the short-term: “We expect Atlantic City revenues to be down 25 percent both this quarter and next,” Moody’s said. “Earnings could decline 40 percent to 50 percent in both quarters. Gaming operators with just one property in Atlantic City, such as Revel Entertainment Group L.L.C. [owner of Revel] and Marina District Finance Co. [owner of Borgata], are most at risk.”
Tags: Atlantic City, Borgata, casinos, gamblers, Gov. Christie, Hurricane Sandy, Moody's, Revel
Beach towns in New Jersey are still reeling from Hurricane Sandy and many are without power, but at least the Atlantic City casinos are open.
One casino opened within two hours of Gov. Christie’s announcement. Like clockwork, a 63-year-old Atlantic City woman arrived for what she described as her “daily visit” to the Golden Nugget. (Studies show those who live close to casinos are more likely to become addicted.) In fact, one of the hurricane victims was a gambler who refused to leave the shore. He was found dead in his flooded his house.
That should give some indication to how gambling can take control of some lives. Casinos know this and in fact depend on repeat and problem gamblers in order to survive. (One study found that more than half of a casino’s revenue came from problem gamblers.)
That shows that gambling is not about fun and entertainment for most customers. Instead, the casinos and states prey on vulnerable and desperate people.
That is the real shame of a public policy that puts gambling profits ahead of the people lawmakers are sworn to protect.
Tags: Atlantic City, casino, Gov. Christie, Hurricane Sandy, hurricane victim, open, problem gamblers
This is perhaps the best indication yet that New Jersey officials are worried about the impact of Hurricane Sandy: Gov. Christie ordered the casinos in Atlantic City closed.
This is not to make light of the seriousness of the storm. But state officials are often reluctant to close the casinos for just about anything. Often after big storms, one of the first businesses to re-open are the casinos.
The focus on keeping the casinos open underscores the misplaced priorities of many government officials who do whatever it takes to keep the gambling revenue flowing into state coffers. Forcing casinos to close and kicking out gamblers also underscores the addictive nature of gambling. Fortunately, this time around, Gov. Christie had enough sense to put safety before casino profits.
Tags: Atlantic City, casinos, Gov. Christie, Hurricane Sandy
New Jersey Gov. Chris Christie plans to allow sports betting in Atlantic City by this fall, despite a federal ban that has limited sports betting to Las Vegas and, in a limited way, Delaware.
Christie essentially challenged the federal government to come after New Jersey. The expansion of sports betting has set off a broader debate about the benefits of legalized sports betting. Sadly, though, this thin report is what passes as media coverage of the debate. The lack of substantive coverage surrounding the expansion of gambling, in many ways enables lawmakers and casino owners to push their agenda.
There a re a number of reasons why legalizing sports betting is a bad idea. Making sports betting more widely available just raises the stakes that games will be rigged. Easier access to sports betting will also lead to more gambling addiction, especially among young makes. Read some previous posts here and here.
But Christie offers the best reason why sports betting is a bad bet. He said half the proceeds from licensing fees will fund programs to help compulsive gamblers. What does that say about a public policy measure when the state has to set aside half of the revenue from licensing fees to treat problem gamblers?
Meanwhile, as New Jersey lawmakers push to expand gambling, state inspectors are busy cracking down on rigged games along the boardwalk in Atlantic City. Ironically, the state has cut back on inspectors at the casinos, while beefing up partols of boardwalk businesses to ensure that balloons are inflated properly and other silly rules. What is wrong with this picture?
Tags: Atlantic City, federal ban, Gov. Christie, Las Vegas, sports betting
The casino that is supposed to save Atlantic City is off to a poor start.
The $2.4 billion Revel casino had just $13.4 million in revenue in its first month of operation. That is a very sluggish showing for the mega-casino that received so much hype and attention – not to mention a state bailout from Gov. Chris Christie. By comparison, the Borgata Hotel Casino & Spa raked in $54 million in gambling revenue in March. Overall, revenue at the Atlantic City casinos was down 10 percent for the month.
Revel’s ranking is near the bottom for the 12 casinos in Atlantic City. Revel’s manager expects business to pick up in the summer. It better. Elected officials are banking the Revel will bring gamblers back to Atlantic City, which has seen its gambling revenue plummet since Pennsylvania legalized gambling in 2004.
Maybe the old ladies and sweatsuit crowd is intimidated by the Revel’s upscale image.
Tags: Atlantic City, Borgata, casino, Gov. Christie, Revel, revenue
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.
Tags: Atlantic City, bailout, Gov. Christie, Kevin DeSanctis, Revel
Atlantic City is banking on the new Revel Casino to help boost its sagging gambling fortunes. But the casino isn’t even open and already some New Jersey lawmakers want to expand gambling to the Meadowlands in Northern Jersey.
Assembly Speaker Sheila Oliver announced plans to hold legislative hearings to bring gambling to the Meadowlands on the same day Gov. Christie toured the $2.4 billion Revel casino in Atalntic City. (Not to boast, but I predicted as much in a recent piece for Philadelphia Magazine.)
The problem is this: the spread of gambling is like an arms race. Each time a state legalizes casinos or adds a new form of gambling, the neighboring states scramble to top that move in order to compete. In Atlantic City, the casinos have been hammered by the expansion of gambling in Pennsylvania. Now, that New York is moving to legalize commerical casinos, many Jersey lawmakers are pushing for casinos in the Meadowlands in order to keep gamblers from going to the Empire State. The same thing is happening in Delaware (see post below).
The idea of casinos in the Meadowlands may be on hold in the short term. That’s because Christie rejected the idea now that he has bet big on Atlantic City through the $261 million taxpayer-financied bailout he gave to Revel and money-saving regulation cuts the state gave the casino industry. Here’s a sure bet: Once the novelty of the Revel wears off, and casinos in New York open, the pressure will build to bring casinos to the Meadowlands.
Tags: arms race, casino, Gov. Christie, Meadowlands, Revel, Sheila Oliver
Gov. Christie wants Bruce Springsteen to perform a concert at the new Revel Casino at Atlantic City. The governor is a big Springsteen fan, but the Boss should not sing for Christie or the Revel.
After all, the Revel stands for everything Springsteen has spent his career railing against. In particular, Springsteen’s new album – featuring the hit single “We Take Care of Our Own” – was inspired by his outrage at the cozy ties between Washington and Wall Street, and the greed that led to the economic collapse that cost many their homes and jobs.
The Revel Casino is a monument to those cozy ties between government and Wall Street. After all, Christie used $261 million in state tax credits to bail out private investors in the $2.4 billion Revel. Those investors included Morgan Stanley, the Wall Street bank that walked away from the half-built casino but now stands to profit after Christie’s bailout. (No mention of that in Christie’s Tweets encouraging Springsteen to play at the Revel.
At the same time, Revel plans to impose term limits on some employees by requiring them to reapply for their jobs after four to six years. This will keep a cap on salaries and enable Revel to weed out cocktail servers who are not young and sexy enough.
More to the point, the Revel’s business model profits by luring hard working people to gamble away their money against steep odds. Those down on their luck types are the people Springsteen has chronicled over the years. The Boss touched on this in his new song ”Shackled and Drawn” when he sang:
Gambling man rolls the dice
Workingman pays the bill
It’s still fat and easy up on banker’s hill
Up on banker’s hill, the party’s going strong
Down here below we’re shackled and drawn
So while the notion of Springsteen playing Atlantic City is exciting at first blush, the Boss owes Christie and the Revel nothing. If anything, Springsteen should sing for the long lines outside the soup kitchen that one sees as they exit the AC Expressway and enter the long-struggling Jersey Shore town.
Tags: Atlantic City, Bruce Springsteen, casino, Gov. Christie, Revel