Atlantic City Casinos to Retain 50% of Revel Revenue, Fitch SaysBrian Chappatta
Casinos in Atlantic City, New Jersey, will pick up about half of the revenue from the $2.6 billion Revel resort after it closes next week, according to Fitch Ratings.
The company also said in a report today that the city will retain more than 60 percent of money generated at Trump Plaza Hotel & Casino and 75 percent at Caesar’s Showboat when they go dark in the coming weeks. The casino industry should generate $2.5 billion in 2015, down from a peak above $5 billion in 2006, according to the report.
“Atlantic City remains one of the few places in the populous tri-state area to offer a full suite of eat, play and stay options and has by far the lowest gaming taxes,” said Fitch analyst Alex Bumazhny in New York. The remaining casinos, such as Bally’s Atlantic City and Trump Taj Majal, “should see a sizable lift in business from the closures.”
Atlantic City, buffeted by successful casino property-tax appeals and competition from neighboring states, had its credit rating cut to speculative grade by Moody’s Investors Service last month. It expects to eliminate almost 18 percent of its municipal workforce, Mayor Don Guardian said this week.
Revel, the newest casino, said it will close Sept. 1 after failing to find a buyer in bankruptcy. It joins the Atlantic Club, which closed in January; and the planned shutting of Showboat on Aug. 31 and Trump Plaza Sept. 16. The moves affect 7,800 employees and would leave eight casinos, down from as many as 12 in the city of about 40,000.
Atlantic City general obligations maturing in December 2025 traded today with yields as low as 4.53 percent, the least since Aug. 12, data compiled by Bloomberg show. Bond spreads surged to record highs after Moody’s July 23 downgrade.