Friday, September 5, 2014

Casino Bankruptcies In Atlantic City And Their Repurcusions

English: The Showboat Casino in Atlantic City
English: The Showboat Casino in Atlantic City (Photo credit: Wikipedia)
The Labor Day weekend was the last business weekend for the Revel casino. Being a major taxpayer, together with the other three casinos exiting the market, a dip in tax collected by $10 billion is expected. The casino that had an initial capital of $2.4 billion has sunk into bankruptcy twice besides having a short life span.

The casino is not new to trouble as it walked into its first major loss before construction completion when Morgan Stanley left. This was in 2010 and it ended up opening two years late. The loss that amounted to $1.2 billion was a rough start. The competition from casinos in the neighbouring towns saw the management change strategies. The emphasis was on entertainment especially for the younger generation as opposed to gaming. The revenue in Atlantic City collected from gaming activities almost halved between 2006 and now.

With persistence losses even during peak periods, the casino has had to change strategies often. The first in line was the building plan that was adjusted to create more public space and one instead of the two hotels planned for. The closure on Monday was signified by few revellers, few independent restaurants open and fewer than usual dishes on the menu. Present were state troopers to avert any possible act of vandalism. This is after the Atlantic club closure was marred by such acts. The casino bankruptcies in Atlantic City will adversely affect the economy.

With a record four casino bankruptcies in a year, the Atlantic City, the loss of employment opportunities is evident. The Showboat casino went down before the Revel while the Trump is set to close down on 16th September. The employees had mixed feelings. Some opted to work till the end while others were sceptical and took off for early vacations.

The cancellation of the bankruptcy proceeding of Revel AC Inc shortly after the closure of Revel was an unexpected twist of events. Claims of deals made with landlords, creditors and other stakeholders are credited for the twist. With decline in competition and the strategic location of Revel on the Oceanfront, David Berliner of BDO Consulting, New York anticipates a great deal. Though the property will lay low for a while before being sold, it is expected to raise an amount much lower than the capital used.

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