New Jersey bet on the wrong casino with Revel
The $2.4 billion Vegas-style resort's planned bankruptcy means skeptics were right when they said it would never score in the city's already troubled gambling market.
The resort, which brags about its ocean-view rooms with flat-screen TVs and marble-tiled bathrooms, tried to bring Las Vegas glitz to the blue-collar Jersey town and failed to attract customers. According to state officials, Revel generated a paltry $8 million in total casino revenue in January, ranking dead last among the city's 11 casinos. That's why the news earlier this week that Revel plans to file Chapter 11 bankruptcy is hardly a shock.
"Revel had amended its revolving line of credit at least three times since the summer, spending money at a fierce clip while bringing in less than half the $30 million a month that Wall Street analysts said it needed to sustain its massive 6.3 million-square-foot operation," according to the Philadelphia Inquirer.
As part of its aid package, New Jersey gave Revel a Redevelopment and Growth tax incentive award of $261 million, which allowed it to receive a rebate of tax revenues over 20 years. No taxpayer funds were provided up front.
The resort has had a rocky history for years. Morgan Stanley (MS) first began developing the project in 2006 but backed out before construction was complete and wrote down its entire $1.25 billion investment. Chief Executive Kevin Desanctis was brought in 2011, but his status with Revel after the bankruptcy remains unclear, according to The Wall Street Journal.
Many critics of the aid, including state Democrats, have argued that the state's oversight of Revel was lax. Bob McDevitt, head of Atlantic City's largest casino union, which has tried to organize Revel's workers, is quoted in the Press of Atlantic City saying, "We warned them this would be a catastrophe, but no one listened. Now, it's a catastrophe."
Revel has a tough road ahead. Increased competition from neighboring states such as Pennsylvania have eroded Atlantic City's business, causing revenue to fall in each of the last six years. Revel clearly didn't help that trend.
--Jonathan Berr does not own shares of the listed stocks. Follow him on Twitter @jdberr.
Hummm….It is a lovely place. I haven’t stayed there but from what I could see when visited, the interior was gorgeous. You know how they screwed their revenue?....because the owners/management thumbed their noises at smokers. YES “Smokers”. We patronize casinos too! High rollers or not. But believe me, nobody is going to spend money in a casino that doesn't share space with smokers and afford them good/popular machines too. We set, we play, and we smoke. When we are free to smoke; we are free to spend our money. Everybody doesn’t play the tables. Oh, and what is with the “You can’t order more than one drink at a time per person”? Why should we... the customer have to hang around a machine for sometimes 50 minutes to an hour or so before you can order another drink- that is- if we ever got to order a drink. That’s why we order TWO at a time. Hire more staff to timely take our order and return with our beverages if the grown-up can’t have but one beverage at a time!
P.S. I am sorry that the Revel isn’t working out as thought. Tip: Sometimes you can be a little too exclusive and it doesn’t pay off. Just Saying.
Casinos that don't have smoking usually are few and far between...Most survive very poorly..
Case in Point..
For the most part Gambling, drinking and smoking; Pretty much go hand in hand.
For a large majority of Gamers.
But I do agree, having a non-smoking area for some is a benefit for them.
Sitting down to a table where there are smokers, and then waving your hands or coughing;
Is extremely RUDE...We do not need any preaching or whining from you.
And we certainly DON'T NEED your GERMS from coughing, azzhole.
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