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.

By Jonathan Berr Feb 22, 2013 9:45AM
The Revel casino is seen on the Boardwalk Thursday, Feb. 14, 2013, in Atlantic City ( Mel Evans/AP Photo)When the swanky $2.4 billion Revel casino opened in Atlantic City last year, New Jersey Governor Chris Christie hailed it as a "game-changer" for the struggling Jersey Shore resort. That's why the state provided it with $300 million worth of aid. He couldn't have been more wrong about the most expensive casino in the city's history.

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.
58Comments
Feb 23, 2013 12:01AM
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The wife and I  enjoy most of the casinos, especially the smoke free zones but will leave an area or casino if the smoke pollutes the non-smoking area. I can understand them trying to keep an area for smokers/non-smokers but they have to improve the air circulation if they want everybody to stay. As far as Atlantic City it's just getting too expensive even to drive there with tolls and gas the way it is. Work on those (and taxes overall) and your attendance will improve.
Feb 22, 2013 9:46PM
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Haven't been to a Jersey casino in years. To expensive to get from one to the other. Boardwalk side gouges for any type of ride transportation, street side is a slummy ghetto to be feared. We use the  casinos that were built in Pa. Del. and Md. Most are a short ride and have everything AC offers plus cleanliness and courtesy!
Feb 22, 2013 9:11PM
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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.

Feb 22, 2013 8:52PM
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..I hear people say Governor Christieis a RINO, and isn't a real republican...HEY, he gave some crooked, big-business scammers hundreds of millions of taxpayer dollars!! What's more republican than that???
Feb 22, 2013 8:17PM
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Lotteries take money from people who have the least amount of money and people who least understand their odds of winning, and redistribute the lottery proceeds to pay for public services just like an optional tax for those who can be fooled. Simple put, the lottery is a stupid man’s tax.
Feb 22, 2013 8:16PM
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Gaming is great till everyone jumps on board then all you have is the locals who make minimum wage.Lav Vegas is the exception.It's still a dead end revenue plan for the states that will continue to decline as fast as the income gap widens between the rich and the rest of us.  
Feb 22, 2013 7:24PM
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like here in calif i used to go to reno alot thent he indians opened a casino within a hour from my  house  so instead of a 4 hour drive i have a hour drive, and dont have oto fight the ice and snow on i-80, and reno is on the verge of drying up,ther ere like 4or 5 casinos within a hour and half drive of me,so why go to reno and vegas is a 10 hour drive, not worth it to lose money,, rather lose it closer to home,lol
Feb 22, 2013 7:16PM
Feb 22, 2013 7:14PM
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When it comes to gambling; from DC; I can get to Arundell Mills(40 Mls) in 35 mins, Charlestown Va.(80 mls) in 1hr 15 mins and Atlantic City's Revel(182 Mls) in 2 hrs 15 mins. I'd drive to the
Revel and bypass ALL of the others any day for a GREAT time and walk the boardwalk in NJ if
I don't. It's still a great place to vacation to; even when I'm there...it's strictly business.  We enjoy the therapy of getting away; kinda like a Time-Share at NO cost(Comps/Shows/Dinner) but Gas/Tolls/Food and other out-of-pocket expenses...
Give me the Revel and I hope they can work this one out as a 1st timer Chapter 11. Donald Trump knows this one all too well... 
The Revel is off the chain for immenities, service, and high tech accommodations even tho I'm old school...DJ Nate D. Skate(Of the Sound Service) / WPFW 89.3 FM Radio / www.WPFW.Org  
Feb 22, 2013 7:01PM
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and they say they need money from govermant fund to fix boardswalk maybe not after they do that ...for what maybe the govnor wants to spend 1 billion this time on one haaaaaaaaaaa.....................   STUPID ****........
Feb 22, 2013 6:08PM
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Casino's,the answer to every cities problems. Needed revenue, jobs, increased population. Problem just like your federal gov't the cities have the money spent before it is ever made. People have to learn how to make a balanced budget and live by it. Where there are casinos there are drugs, alcohol, money and domestic problems. Now are the casinos worth the problems? I say let the casinos stay where they were intended Las Vegas.
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The problem isn't the revel we've always had good service and the people were friendly.   The problem is AC is a toilet.  Atlantic city is corrupt with the worst mayor possible, the streets are old and filthy and worst yet is the unbelievable crime.  Murder after murder in the city, hookers drugs, thousands of illegal aliens, the boardwalk isn't safe theirs nothing to do.  It's a hole sorry but its the truth.  Coming into the city was fixed up and dealt with cosmetically but the crime continues.
Feb 22, 2013 5:50PM
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Thats funny another 'Christie' Whitman gave the casino's $300 or $400 million to build a tunnel to get  from point A to point B 5 minutes faster.They should have signs when exiting Atlantic City "LOSERS THIS WAY " 
Feb 22, 2013 5:40PM
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AC has over expanded.  The Revel is a great hotel and casino but there are tooo many. 
Feb 22, 2013 5:33PM
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I miss not being able to use coins anymore.  Don't like that paper crap they are using now.  And I miss the old machines - like Red,White and Blue 7's, Triple Diamonds, etc.  When they started giving you slips of paper to take to get your winnings, I stopped going to all casinos.  When they bring the coins back, I'll be back.
Feb 22, 2013 5:28PM
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No wonder it cost so much to build... Union ripoff pinky ring labor.
Feb 22, 2013 5:27PM
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We were at Revel twice..The casino floor to small..Food prices way to high...
Feb 22, 2013 5:25PM
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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.

Feb 22, 2013 5:23PM
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brood550  Standard response from a Dumacrat
Feb 22, 2013 5:21PM
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I Live close to  two casinos here in Pa. My husband and i still enjoy going to Atlantic City (booked for next weekend) We went to the Revel when it first opened. SMOKE FREE ! never went back .I Think the smoking ban in NJ is really hurting the Casinos. Most of the casinos seem like the smoking section is like 10% & 90% non smoking .The non smoking is usually pretty empty. They should look at Las vegas with no smoking bans.We go every year and and all the casinos are packed!
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