Aug. 12 (Bloomberg) -- Revel, the bankrupt Atlantic City casino, will close its doors next month after failing to find a qualified buyer, dealing the latest blow to the struggling New Jersey resort town.
The two-year-old facility, built for $2.6 billion, was once owned by Morgan Stanley. Atlantic City’s first new casino since 2003, it was taken over by creditors last year and filed for bankruptcy a second time in June. It will be shuttered no later than Sept. 10, Revel AC Inc. said in a statement today.
“Despite the effort to improve the financial performance of Revel, it has not proven to be enough to put the property on a stable financial footing,” the company said.
Revel, which employs about 3,140 people, fell victim to a tailspin in the Atlantic City gambling industry. Competition from a growing number of venues in neighboring Pennsylvania, Maryland and New York lured patrons away from the market, once the dominant East Coast gambling hub.
Casino revenue in Atlantic City has dropped for seven straight years, falling to $2.86 billion last year from a high of $5.07 billion in 2006, according to Bloomberg Intelligence.
Revel AC, which is controlled by hedge funds, last week postponed its auction until Aug. 14, to analyze multiple bids, according to court documents filed in U.S. Bankruptcy Court in Camden, New Jersey.
$1 Billion Loss
“We are disappointed in the decision that the Board of Revel has made as there appeared to be several bidders for the property,” Atlantic City Mayor Don Guardian said in a statement today. “While I am not privy to the current facts that led to this decision, I do know this process is a complex one compounded by an extremely short time frame and cash flow challenges.”
Revel had been the centerpiece of New Jersey Governor Chris Christie’s 2010 bet to revive Atlantic City. The resort, on the boardwalk, has about 130,000 square feet of gaming space, with 1,399 rooms, 2,400 slot machines, 130 table games and a poker room, according to its website. It has indoor and outdoor pools, and 13 restaurants and night clubs.
Construction of Revel stalled in 2009 after former owner Morgan Stanley abandoned the complex and lost more than $1 billion. It opened in April 2012 and then closed for five days in October of that year because of Hurricane Sandy. Revel filed for bankruptcy for the first time in March 2013 after reaching an agreement with lenders on a debt-for-equity swap.
Revel now joins a list of casinos in Atlantic City which have closed or are planning to. The Trump Plaza Hotel & Casino plans to shutter as soon as Sept. 16, putting about 1,000 people out of work. The Atlantic Club closed in January and Caesars Entertainment Corp. plans to shut the Showboat on Aug. 31.
“As Pennsylvania gaming in particular became available to the incumbent customer group, the drive-in business in Atlantic City has all but disappeared,” Caesars Chief Executive Officer Gary Loveman said on a conference call yesterday. “That was both a large and very lucrative part of what was on offer in Atlantic City and I think most of us who worked there agree that that business will never return.”
Christie, a Republican, announced in 2010 a five-year turnaround plan for Atlantic City that included a marketing push to increase non-gambling tourism. The state also began letting casinos offer online betting as a way to attract new business. Revenue hasn’t met forecasts.
June gambling revenue in Atlantic City fell 1.8 percent to $236 million from $240.2 million a year earlier, according to the New Jersey Division of Gaming Enforcement. Excluding online activity, which amounted to $9.51 million, betting declined 5.7 percent.
New Jersey approved gambling in 1976 and limited it to Atlantic City to boost the state’s weakening finances. The first casino, Resorts International, opened in 1978. Gambling revenue increased every year until 2007, when the recession began.
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