Atlantic City hasn’t had much luck this year, but authorities are looking for ways to “stop the bleeding” and help the city recover financially.
The former gambling kingdom just can’t catch a break. By the end of this year, Atlantic City may see its fifth casino sink, causing unemployment rates to go up yet again. As the city is suffering from the closures, authorities are looking for a way to bounce back by completely rebuilding it.
There are a number of closed shops and casinos in the city, but if you think about how hard Atlantic City has had it this year, you’ll be quite pleasantly impressed with the amount of new construction here. Right across from the now-bankrupt Trump Plaza, a Bass Pro outdoor goods store will rise over an entire city block.
According to online gambling news, New Jersey’s Casino Reinvestment Development Authority offered land and $12 million in cash to help develop the project which will employ 290 people. Mayor Don Guardian says the city has become too dependent on gambling revenues, but it’s time for a change.
“The city was happy, because it provided decent jobs with benefits and it paid the taxes, but we lost everything else. You lose your whole entrepreneurial spirit,” he said in an interview.
NPR: As Casinos Fold, Stakes Are High For Atlantic City Transformation
Just as Las Vegas did two decades ago, Atlantic City is trying to become less dependent on casino profits and branch out more into entertainment. It’s looking to become a destination for conferences and various events, not just a place where you can gamble.
Caesars Entertainment said it took nine million pounds of steel to build the structure of the new Waterfront Conference Center in Atlantic City, which has received substantial backing from the developer and from the casino reinvestment authority. Rick Mazer, regional president of Caesars Entertainment said: “This is the business that I think will evolve and regrow Atlantic City.”
However, some experts are skeptical of the project’s potential to succeed. Oliver Cooke, an economist at nearby Richard Stockton College of New Jersey, has his doubts. “You simply are not going to consume your way out of the morass that you’re in,” he explained. “Doing things like building more retail, building more convention centers, has a very, very limited upside.”
Meanwhile, authorities are talking about reselling, reopening and repurposing some casinos. Just last week, Stockton College announced it was going to buy the old Showboat property and The Revel’s new owners are allegedly planning to make a new investment and reopen the venue.
But Atlantic City needs more than just commercial projects. Mayor Don Guardian hopes to see new residents move in and rebuild the city. “Then we’ve gotta work on our school system,” he continues. “But I gotta fix the city first, find jobs, get taxes, reduce cost of government, make the place pretty, and then we’ll work on the schools. I like the challenge.”
Washington Times: Taxes, schools, casinos key to Christie AC plan
Atlantic City officials are trying to come up with ways to get the economy up and running again. Governor Chris Christie has commissioned a plan calling for more predictable taxes for casinos, temporarily freezing taxes on non-gambling property and halting payments on employee pension plans, as well as offering more support for schools that reduce costs.
The commission appointed to study Atlantic City’s future prospects has released a set of recommendations, but the governor hasn’t committed himself to anything yet. According to the commission, the city should have an emergency manager holding “extraordinary supervisory powers” over expenses and taxes.
Experts added that Atlantic City should form a public-private development corporation, similar to the one that helped New Brunswick. An essential part of the plan is property tax reform.
“Extraordinary state and local support is required in the transition phase of the Atlantic City revitalization strategy focusing on immediate activities with a high probability of success, including balancing the municipal and school cost structure toward ‘new normal,’” panel Chairman Jon Hanson wrote.
The report said: “High effective rates and a rapidly declining tax base have created an immense financial burden for residents, local businesses and the casino industry,” the report read. The “entire Atlantic City gaming industry is at risk as each incremental casino closure results in a greater tax increase than revenue increase for the surviving casinos.”
If freed from making pension payments for three years, the city could save up to $71.1 million, while in the same time reducing the need to borrow money. The plan proposes regionalizing the police and fire departments, thus cutting costs by $25 million a year.
The $30 million used by the Atlantic City Alliance to promote the city should be redirected to the new development corporation, ACDevCo, the commission recommended.
Reuters: New Jersey college buys Atlantic City’s closed Showboat casino
The shuttered Showboat Atlantic City gambling resort formerly operated by Caesars Entertainment could be bought by a college in southern New Jersey. The Richard Stockton College wants to transform the 1.4 million square foot property completely, by turning it into a campus.
The building sits on 28 beachfront acres and holds 1,329 hotel rooms. The deal is subject to due diligence checks, but the terms of the contract were not disclosed yet.
Stockton president Herman Saatkamp said: “Our intent is to engage in a project that enhances Stockton’s educational growth, offerings and cost-containment while at the same time brings new educational opportunities to Atlantic City.”
Although the casino resort was still making profit, Caesars closed it in August. The venues was reportedly sacrificed in an attempt to consolidate the city’s deteriorating gaming market.
Caesars CEO Gary Loveman is hopeful that the new agreement could help steer the local economy in a new direction. “The transformation and revitalization of Atlantic City requires the addition of a diverse set of reasons for people to come visit,” he told reporters.
In 2010, Stockton College bought the Seaview Resort in Galloway Township for $20 million. Part of the property is used to house students and train them in hospitality.
New Jersey residents might have to wait a while longer before they can place bets on sports and horse races in the state.
With Governor Chris Christie approving a new gambling bill and rumors of the Taj Mahal closing later in November, New Jersey continues to be at the centre of attention in the US. At the end of last week, state authorities gave casinos and racetracks the green light to start accepting bets, but professional sports leagues have challenged the decision in court.
Monmouth Park is prepared to start taking bets at the racetrack this Sunday, but punters might have to wait a while longer because the country’s four professional sports leagues and the National Collegiate Athletic Association (NCAA) have filed a lawsuit on Monday, seeking a temporary injunction to stop local gambling venues from opening sports books.
On the other hand, industry representatives argue that allowing sports betting in the state could help thousands of former Atlantic City casino employees find a new job.
NY Times: Sports Betting in New Jersey Is Challenged
For a while now, New Jersey has been trying to come up with ways to circumvent a 1992 federal law banning state regulators from handing out sports betting licenses. Last week, an important step has been taken in that direction after Governor Chris Christie signed the new gambling law partially repealing the statewide sports wagering ban. But then came the bad news: professional leagues are seeking an injunction from Judge Michael A. Shipp of Federal District Court.
New Jersey’s first sports book is schedules to have a soft opening this Sunday at Monmouth Park. The racetrack’s operators said they’re planning to have 10 tellers take bets, only on the National Football League for now, all by hand. Both the track’s managers and state leaders expect thousands of people lining up to place their bets on football Sundays.
Dennis Drazin, a legal adviser for Monmouth Park, told reporters: “As we speak, we are geared up to start taking bets.” Lawyers representing the NCAA, the National Basketball Association, the National Football League, the National Hockey League and the Office of the Commissioner of Baseball declined to make any comments at this point.
The challenge argues that New Jersey has tried this trick three years ago, when attempts to legalize gambling on amateur and professional sports failed. “Because this effort is no more lawful than New Jersey’s past ones, it, too, should be enjoined,” lawyers wrote in the complaint.
On the other hand, State Senator Raymond J. Lesniak said: “I have a hard time believing that a judge will determine that the leagues can prove they can be irreparably damaged by Monmouth racetrack’s taking bets, when people are betting every single day legally in Nevada,” adding that sports associations are looking to secure a monopoly.
USA Today: NFL, other leagues move to stop N.J. sports betting plan
In the complained filed earlier this week, the NFL, NBA, NHL, MLB and the NCAA said New Jersey was “in clear and flagrant violation of federal law.” Attorneys representing the leagues are expected to ask the judge for a temporary restraining order or a preliminary injunction, to prevent local businesses from taking bets.
According to track consultant Dennis Drazin, Monmouth Park is planning to take bets on sports scores as early as October 26, during the Jets-Bills game, as well as for other NFL match-ups scheduled for Sunday. The operator is likely to add a $100 bet limit for the first day. Records will initially be kept by hand, and the track expects 5,000 customers to rush to the bookies this Sunday.
“We won’t be able to have everything set up electronically for 3 or 4 weeks,” Drazin explained. “My own take on this is the people have been clamoring for this for so long that we want to introduce them to it even if you can’t do it full scale just yet.’”
Legal analysts said it’s hard to predict if all this will actually happen on Sunday.
“The leagues loaded up their complaint with buzzwords to paint a picture of immediate and irreparable harm to the plaintiffs if bets start being taken, and they’ve won injunctive relief in the past,” gaming attorney Christopher Soriano said.
According to Drazin, the track could earn as much as $1 billion per year from sports betting, giving the state’s gambling industry a much needed boost.
Philadelphia Business Journal: Hundreds file for unemployment after casino closures
Atlantic City saw its last wave of casino workers filing for unemployment at the beginning of September, following the closure of two casinos over Labor Day weekend. More than 5,000 employees lost their jobs in the process.
An assistance center was set up at the Atlantic City Convention Center, and officials from the state Department of Labor and union representatives from Local 54 of Unite-HERE were there to offer them help in filing for unemployment. They were also given information on how to sign up for health insurance.
“We’re working every day to create solutions,” Mayor Don Guardian told reporters. “As a city that cares about its residents first, we want you to know what steps we’re taking to assist in transitioning individuals losing jobs.”
Officials added that laid-off workers would be getting all the necessary training “to help ensure [they] have a smooth, quick transition to new employment.”
Job-training initiatives will be held at the Atlantic Cape Community College, aiming to train up to 1,200 employees every year. Officials plan to open a job placement center by October, assisting all Atlantic City residents.
Atlantic City started the year with 12 casinos, but their number has dropped to just eight by mid-September.
The situation of the Trump Taj Mahal seems hopeless after Atlantic City officials refused to reduce taxes in order to save the casino.
In May 1984, when Trump Plaza opened its doors to customers, it became Atlantic City’s 10th casino. The venue’s financial problems became evident this year, and by the middle of September owners were left with no other option but to close it.
The entire city is dealing with a huge budget deficit and several casinos have gone out of business this year, as the gambling Mecca is falling under the pressure of competition from neighboring states. In order to recover from the financial disaster, workers will be laid off and taxes on homes and businesses will be raised, as local authorities are planning to cut $40 million from the city’s budget over the next four years.
Out of the state’s 12 casinos, four have already closed. The Trump Taj Mahal Casino and Resort would be the fifth one, with Trump Entertainment threatening to shut it down mid-November. So far, all plans to save the venue have failed.
ABC News: AP: Mayor Nixes Tax Break to Save Taj Mahal Casino
According to the latest gambling news, Atlantic City Mayor Don Guardian has rejected a proposal to revive the Trump Taj Mahal Casino Resort. The city cannot afford to meet the owners’ demands for reduced taxes, the mayor explained in an interview with the Associated Press.
In the proposal, the venue’s owners asked local authorities to reduce the tax assessments of Trump Plaza from $248 million to $40 million. The hotel and casino complex closed at the middle of September. In addition, the company asked for another reduction – from $1 billion to $300 million – for the Taj Mahal.
“Given the difficult economic situation in Atlantic City, we are not in a position to accept these requests,” Mayor Don Guardian told reporters. “We cannot afford those demands.”
With these plans being rejected, the city will most likely say “no” to another offer proposed by billionaire businessman Carl Icahn, leaving the struggling venue with no other options. The entrepreneur has promised to bail the casino out with a $100 million investment, but the project comes with strings attached.
Now it looks like Trump Entertainment could close the Taj Mahal at the middle of November.
CTV News: Billionaire may invest $100M save Trump’s Taj Mahal Casino
Billionaire businessman Carl Icahn is considering spending $100 million to save the now-bankrupt Trump Taj Mahal Casino Resort, but his offer comes with considerable strings attached. The investor said he will bail the venue out “if and only if” he gets givebacks from the workers’ union, $25 million in funds from an agency in New Jersey, and tax breaks regardless of the state’s current taxation and gambling laws.
At a recent appearance in bankruptcy court, Trump Entertainment Resorts presented a letter from the businessman’s lawyer, detailing his conditions for saving the casino and asking that the debt he owns in it be converted to equity that would give him ownership.
“Notwithstanding the fact that putting more money into the Taj is a questionable business decision, we share the company’s desire to see the Taj Mahal remain open and preserve the jobs of the company’s employees,” the attorney wrote, adding that failing to get the concessions “would make it impossible to operate a viable company at this time.”
The court filing paints a dismal picture of the casino’s current financial situation and argues there is no hope for survival without Icahn’s investment. Trump Entertainment said it was going to close the venue in November, leaving 2,041 full-time and 825 part-time employees without work.
Union president Bob McDevitt warned that the businessman is “seeking to take advantage of the Atlantic City crisis to do away with the health care thousands of south Jersey casino workers and their families have fought for and relied upon for over 30 years,” and added that his proposal aims to cut total compensation for workers.
Wall Street Journal: Trump Eyes Possible Return to Atlantic City
Billionaire Donald Trump is considering buying back two casinos in Atlantic City, both of them bearing his name, but still wants his name removed from the properties. The businessman hasn’t been involved in the management of either the Trump Taj Mahal, or the Trump Plaza for seven years now. Moreover, he told the Wall Street Journal that he disagrees with the way the venues are being run.
“We have a very high standard” in the licensing contract, he told reporters, “and they don’t operate it to our standards.”
“I’d fix them and bring them back to a very high standard,” Trump said. While acknowledging that Atlantic is in a “very difficult place”, he added: “I think a smaller Atlantic City maybe has a chance.”
Trump’s lawyers argued in court that the licensing contract requires operators to maintain “the highest levels of quality, luxury, prestige, and success,” which the plaintiff believes were not met. Inspectors of Trump AC have found a “serious deficiency in quality” and demanded that they be fixed. The casinos responded, claiming they had a plan to address the “deplorable conditions” at the Plaza, but further notices culminated in a lawsuit where Trump asked for his name to be removed from the business.
The casinos were originally developed by Trump and have come close to bankruptcy before. The real-estate mogul is no longer involved in the management of these casinos, but still owns 5% of Trump Entertainment.
Over the past few years, economists and analysts have warned about the “casino saturation” in the north-eastern part of the US. Now authorities and business owners are witnessing the disaster and there’s nothing they can do about it.
With growing competition from other states in the area, New Jersey’s Atlantic City is in a desperate financial situation. There is no way out this time. The only thing left to do is to accept the defeat and close the resort’s unprofitable casinos, one by one. Otherwise, authorities are considering rebranding the city and turning it into a destination that offers visitors more than just casino games.
Let’s take a closer look at what recent gambling news have to say on the subject.
Philly.com: With casinos closing, Atlantic City considers future
About 2,100 employees received 60-day notices the next day, after Caesars Entertainment announced it was closing its Mardi Gras-themed casino, Showboat, by the end of this summer. The bad news comes only a few months after the Atlantic Club also went out of business and Revel is also likely to shutter if its owner doesn’t find a new buyer.
“Atlantic City is undergoing a massive economic transition,” Mayor Don Guardian said at a news conference Friday held at the site where a new nongaming attraction is being built. “We know it is painful for those who are losing their casino jobs.”
Liza Cartmell, chief executive officer of the nonprofit Atlantic City Alliance, told reporters: “Recent developments in Atlantic City are part of the larger picture of excess gaming across the United States that’s leading to painful economic decisions.”
There are simply too many casinos in the country, industry experts say. Over the past ten years, 26 gambling venues opened in the Northeast corridor alone; a dozen of them are located in Pennsylvania and a new one is scheduled to open in Baltimore later in August. The development of the casino industry in the area has put an end to the monopoly enjoyed by Atlantic City for nearly three decades.
ABC News: Atlantic City Casino Shutdown Needed, Analysts Say
The number of casinos in Atlantic City could go down from 12 to 9 by Labor Day, as analysts say the resort has too many gambling venues.
“We know that the oversupply of gaming product is a regional issue, as we’re seeing the effects of the pressure all around Atlantic City,” says Israel Posner, executive director of the Lloyd D. Levenson Institute of Gaming, Hospitality and Tourism at Stockton College.
Atlantic City is going through a rough patch and Mayor Don Guardian believes a makeover will be difficult, but necessary. Officials say the time has come for the city transform itself and become a multi-faceted destination, where casino games are just one of the many entertainment options available.
“Although it is sad today, it’s part of the transition that Atlantic City needs to have,” the mayor told reporters. “There is pain as we go through this transition, but it’s critical for Atlantic City to realize we are no longer the monopoly of gaming on the East Coast. If you build more and more casinos and don’t increase the amount of people coming to them, you’re sharing that wealth. We’re just going through a very difficult time.”
Boston Globe: Atlantic City sees our folly of casinos
The US Supreme Court struck down New Jersey’s attempt to legalize sports betting and Atlantic City casinos are going out of business, despite Governor Chris Christie pumping $260 million of his constituents’ money into one of the local casinos.
While Connecticut’s Mohegan Sun and Foxwoods are considered interlopers who steal customers from the New Jersey resort, the story published in the Boston Globe says all players are “suckers, willing to part with their money for the house, because the house always wins.”
Locals worry about Massachusetts casinos stealing even more business. The market is already oversaturated, they say, and Atlantic City is already competing with Vegas, Connecticut and Philadelphia.
The Guardian: Atlantic City shutters casinos as north-east US builds gambling market
It’s becoming more and more obvious that there are too many casinos in Atlantic City. Competition has caused the Atlantic Club to close its doors, Revel says it will do the same unless owners find a new buyer and Caesars Entertainment is giving up on the Showboat.
During his five years in office, Mayor Don Guardian saw a quarter of the city’s casinos close. He believes this is a sign that Atlantic City needs a makeover, from a popular gambling resort to a multi-faceted destination instead.
Over the past seven years, casino revenue in the city has plunged from $5.2 billion to almost half that amount, reaching just $2.86 billion in 2013. Meanwhile, Pennsylvania surpassed Atlantic City as the country’s second largest casino market after Nevada. And with New Jersey’s new laws allowing locals to play casino games and online poker tournaments, profits soared even more.
All this sounds like bad news, but Fitch Ratings has a different opinion, claiming that “the closure makes financial sense for Caesars and is a positive for the oversupplied Atlantic City market.” According to the expert, Caesars will regain lost customers at its other resorts in the area.
CityLab: Atlantic City Is Becoming the Detroit of Casino Culture
At the beginning of the year, when the media argued that Atlantic City could be going the way of Detroit – which suffered a big shock after being forced to shut down gambling venues – State Senate President Stephen Sweeney and Chris Christie both promised they would not let the city “become Detroit”. Now, the resort is facing a wave of casino closings.
Former casino workers are furious over losing their jobs and Bob McDevitt, president of Local 54 of the Unite-HERE union, told reporters that Caesars’ decision to shut down the Showboat was “a criminal act”, as the venue was still making profit.
To help former employees find new positions within the company, Caesars promised to give them preference for existing roles at the company’s other three Atlantic City venues.