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Three Atlantic City Casinos to Close in August
- June 30, 2014 By Oliver Young -
Atlantic City in New Jersey started 2014 with 12 land based casinos. By the end of August this year, it may close three casinos and could be done to nine. The Atlantic Club is taken down by two rivals, while Revel Casino will close if it can’t find a buyer. Caesars Entertainment, on the other hand, says that there are too many casinos in New Jersey and it plans to shut down the Showboat Casino by the end of August.
Mayor Don Guardian said that Atlantic City is in the middle of a makeover and it transforms from a gambling environment to a multi-faceted destination.
“It is all part of the transition that Atlantic City needs to have,” said the mayor. “Even though it is difficult, Atlantic City is transforming and it is no longer a monopoly of gaming. There is no point of building casinos if people are not coming to them. We are simply going through a difficult time.”
There are about 2,100 workers employed at the Showboat Casino and about 1,600 workers at the Atlantic Club. Most of them will land on the unemployment line and seek work without the help of big companies. If the Revel Casino falls victim to a shutdown, additional 3,200 workers will become unemployed which would lead to an increase in the state’s unemployment rate.
The entire casino revenue of Atlantic City went down from $5.2bn to $2.86bn in 2013. The biggest reason behind this situation is the competition from Pennsylvania which is considered number 2 casino market in the US after leading Nevada. Another reason for the decreased revenue is the launch of online casinos in New York and Maryland.
The executive director of the Lloyd D Levenson Institute of Gaming Israel Posner believes that Atlantic City is dealing with casino saturation for quite some time. “The oversupply of gaming product is a regional issue and now we can see its effects in Atlantic City,” he said.
The president of Local 54 of the Unite-Here casino workers’ union Bob McDevitt is angry and dissatisfied. He warned that having 12 casinos in Atlantic City would cause one of more to shut down.
The Positive Side
On the other hand, some analysts see the situation in Atlantic City as positive. Caesars said in a note to investors that the shutdown of the Showboat Casino makes financial sense and it is positive for the oversupplied casino market in Atlantic City. The casino has almost $50m in labor costs and pays approximately $15m in property tax. The company believes that the customers from the Showboat will be recaptured at its three other resorts in Atlantic City.
Furthermore, a couple of Wall Street analysts believe that the casino market in Atlantic City is correcting itself and this is positive in the long term. The debt analyst with UBS Srihari Rajagopalan views it as unprofitable casinos closing down which is good.