Revel rolls snake eyes again

June 12, 2012 8:28 am

Big shock: the new $2.4 billion Revel casino in Atlantic City had another sluggish month in business, despite lots of free media coverage and an advertising blitz.

Revel’s revenue was $13.9 million in May, ranking eighth among Atlantic City’s dozen casinos. Revenues in April, its first month in business, were $13.4 million. Overall, Atlantic City’s total gambling revenue was $263 million in May, down 9.5 percent
compared with a year ago. Excluding Revel, revenue declined 14.3 percent.

The arrival of Revel is not going to fix what is ailing Atlantic City. The Jersey Shore resort is getting killed by increased competition from Pennsylvania, Delaware and other states, including Maryland, which just opened a new casino. As a result, many more elderly people who used to bus in to Atlantic City now have a local casino closer to home.

The Revel was aiming for the high-end market. But Atlantic City has always been more about low rollers, seniors playing slots and working class heroes hoping to get lucky. The Revel’s fancy amentities and nonsmoking policy don’t appeal to the blue collar crowd.

That’s why Morgan Stanley walked away from the Revel after the financial collpase. The bankers understood it was better to cut their losses. The free market had spoken. But, surprisingly, Gov. Chris Christie, supposedly a free market Republican,  came through with a $261 million taxpayer-bond bailout to help complete construction of the Revel.

The way the bailout is structured it is unlikely taxpayers will ever get repaid. Rather than bring more gamblers to Atlantic City, investors are betting the Revel will more likely take market share from the other existing casinos in Atlantic City. That will only weaken the remaining casinos, which are already struggling from the outside competition.

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.”