Some casinos are flat-out hexed. Consider what used to be the new Aladdin, now Planet Hollywood. Even its opening night was a misnomer, since a failed Fire Department inspection meant that the doors didn't open until the following morning. Among the many strikes against the property was the design, which put the porte-cochère in the basement and provided no vehicular access from/to the Strip, making the property anathema to cab drivers (and casino bosses). The last gasp of the themed-casino era, the Aladdin had a heavy (if cheap-and-cheesy) Arabian Nights motif that didn't resonate with customers to begin with and became positively toxic following the 9/11 attacks. (If you ever were curious as to why a resort called "Planet Hollywood" is done in faintly Mideastern style, that's why.) Co-owner The Sommer Family Trust came up short on its financing obligations, forcing London Clubs International to go all-in and become both operator and primary financier. Unfamiliar with the Vegas market, LCI made operational mistakes, such as opening all the table games when only a fraction of them were drawing play.
Planet Hollywood mogul Robert Earl took over the Aladdin in 2003, renamed it, de-themed the casino, and began reinventing the Desert Passage shopping mall (locally known as "Deserted Passage") as the modernistic Miracle Mile. However, Earl eventually found himself overextended, too – you can see where the Miracle Mile redo petered out for lack of funds, and Caesars Entertainment snapped up the property after it defaulted on its mortgage in 2009.
Another perfect storm of adverse market forces doomed the Showboat in Las Vegas. When then-Harrah's Entertainment bought out the Showboat brand in 2000, it flipped the property to a group of independent operators. The latter had to re-brand the casino, choosing the all-too-appropriate moniker Castaways. It was stranded indeed, halfway between downtown Las Vegas and the Boulder Strip, and in a poverty-stricken neighborhood. Running desperately short on money, the Castaways was foreclosed in 2004. A Hispanic-themed makeover was briefly mooted before Station Casinos stepped in and snapped up the property. After determining that the ramshackle Castaways was unworkable, Station imploded it and toyed with various ways of re-purposing the site. However, even Station ultimately gave up on it, too, and put the land on the market.
In extreme cases, a casino is closed or sold (usually both) because it has run afoul of regulators. One classic instance is then-Binion's Horseshoe, in downtown Las Vegas (now Binion's Gambling Hall). In 2002, the casino began lagging in its medical-insurance and pension-fund payments. The matter went before the National Labor Relations Board and eventually a federal court. Despite several orders to make good on the payments, Binion's kept defaulting. In late 2003, the Culinary Union persuaded a judge to give it the authority to seize $1.9 million from the casino cage. Owner Becky Behnen couldn't even pony up that much: IRS agents and federal marshals gleaned only $1 million but it cleaned the casino out and forced it to close. The Nevada Gaming Commission essentially pressured Behnen to sell, leading to a revolving door of owners: Harrah's, then MTR Gaming, and finally Terry Caudill.
Another casino that got on the wrong side of the regulators was the Tropicana Atlantic City. Its parent company, Aztar Corp., was purchased by hotelier Columbia Sussex in a heavily leveraged, $2.75 billion transaction. Columbia Sussex boss William J. Yung, in roadshow presentations to prospective investors, outlined his intent to make the deal pencil out by dint of draconian cost-cutting, particularly skimping on cleaning and security. After a year, the Trop went before the New Jersey Casino Control Commission to have its license upgraded from an interim one to permanency. Noting items that the casino had tried to conceal from the NJCCC, the commission decreed the Tropicana's regulatory compliance to be "abysmal." It also flunked Columbia Sussex on the Garden State requirement that a casino be maintained as a "first-class facility." Yung was faulted for a "lack of good character, honesty and integrity."
Not only was the license renewal denied, the Tropicana was being dragged down by the unsustainable debt burdens Yung had lumbered himself with, both through an expansion of his hotel chain and a spree of casino buying. Carl Icahn bought the Trop out of bankruptcy for $200 million and rehabilitated its image. The Las Vegas sister property, which was having similar perception problems (including rampant prostitution on its premises), went to Canadian private equity firm Onex Corp., which recently re-sold it to Penn National. (Funny how the same names keep popping up.)
Sometimes a casino closes because the market is drying up. This spectacle is currently playing out along the Mississippi River, where the state of Mississippi's riverboat casinos are bleeding business to Arkansas, which recently legalized slot-like "historical racing" (wagering on edited replays of races already run), causing several Mississippi casinos – including Harrah's Tunica – to close. No casinos have closed in Illinois so far but a smoking ban drove much business to neighboring states and the legalization of slot routes in bars is bleeding business from the industry. (Boyd Gaming has been particularly vocal about this.)
But when it comes to failed casinos, the champion of them all may be Revel, a $2.4 billion white elephant in Atlantic City that answered the question, "What if they built a megaresort and nobody came?" The project seem cursed from the get-go. Showing that Wall Street investment firms make poor casino owners, Revel was the brainchild of Morgan Stanley. Tragedy dogged its inception, as several key executives were killed in a plane crash. In 2010, a construction crane collapsed. The following year, three workers were struck by lightning. And Morgan Stanley, after sinking $932 million into Revel, walked away from its investment. Revel Entertainment Group was formed to take over the project and raise the $1.15 billion needed to complete the property, which had already been downsized from two hotel towers to one.
Despite a splashy Memorial Day weekend official opening (including several concerts by Beyoncé Knowles), Revel never had the impact on the Atlantic City marketplace predicted by Wall Street analysts and feared by rival casinos. Customers avoided it in droves. Miscalculations included a strict no-smoking policy (a bold experiment that had previously put paid to Las Vegas' Silver City Casino back in the '90s) and the lack of a high-limit room in the casino. The city already had one megaresort, Borgata, and as far as customers were concerned, that was all that was needed. Revel Entertainment was not only losing money hand over fist, it was taking out loan upon loan to stay afloat. The casino declared bankruptcy in February 2013, then again in June 2014, then threw in the towel and closed the resort in September 2014.
After an acrimonious bankruptcy proceeding, Revel was sold to eccentric Florida developer Glenn Straub for a paltry $82 million. While pinballing from one idea to another (including renaming the property and re-purposing it as anything from a university to a water park to sanctuary for refugees), Straub announced a June 15, 2016 reopening, despite not having the requisite approvals in hand. At the time of this writing, Straub had missed his deadline by two weeks and the casino-resort was still nameless. Straub's Chinese fire drill seems to forebode yet another casino failure in a town that's already been hard-hit by many others.
