A new casino bankruptcy hearing will take place on Monday to allow troubled Atlantic City mega-resort Revel to reduce its debt and secure new financing, all ahead of the traditional tourist season opening weekend on Memorial Day. It may or may not go smoothly, since a federal agency watchdog and unpaid construction contractors have already voiced objections to the proposal.
The troubled Atlantic City casino market, which has been in freefall since last year’s Superstorm Sandy, set another unpleasant record last Monday. On May 6, the American Gaming Association announced that New Jersey had undergone “the largest drop in casino tax revenues of any state in the country at 8.2 percent.”
The report blamed temporary casino closings and the bad publicity resulting from Hurricane Sandy, which will go away. It also pointed to increased competition from newer, more conveniently located casinos in the mid-Atlantic area, which won’t.
While the glitzy year-old $2.4 billion Revel probably did increase visits to Atlantic City, it simply wasn’t enough. Atlantic City’s newest casino is crippled by a $1.5 billion debt — too much to overcome just by beating players at the slots and the tables. Therefore, Revel first filed for Chapter 11 bankruptcy restructuring in March.
If approved by the judge, the plan will allow the casino to shed a cool one billion in debt.
The new casino bankruptcy discussion came on top of a Poker Stars dispute with The Atlantic Club (TAC), which also exploded into the open last Monday. Acording to court paperwork filed by the online gaming giant, Stars struck a deal to buy the troubled casino for a puny $15 million — $5 million less than the previous record low price for an Atlantic City casino of $20 million set by Trump Plaza.
You kids won’t remember this, but there used to be a saying that no one ever went broke running a casino. That’s before Donald Trump came along and showed us how.
Be that as it may, there’s some bad blood between Stars and TAC. The online gaming giant said they’d already paid $11 million. On May 6, Stars asked a New Jersey court to issue a restraining order to stop The Atlantic Club from selling themselves to somebody else.
The Atlantic Club said that the deal is dead but offered no further comment.
Stars claimed that The Atlantic Club wants to bill them for an additional $4 million, forcing them to pay the entire $15 million as a termination fee. Ouch.
These days, it’s hard to keep up with all of the new casino bankruptcy and broken deals shenanigans — especially in Atlantic City.