Owned by former creditors, Revel Casino Hotel is dropping a bankruptcy on newer creditors. Hopefully this move will stave off the Aug. 18 closing (perhaps as late as Sept. 1.) that was threatened in a letter to 
employees yesterday, although the company say it’s a WARN Act formality. According to Revel President Scott Kreeger, $125 million has been borrowed to nurse the resort through this latest Chapter 11. (The Book of Revel has few chapters to date but many Chapters 11.) The property listed $1 billion in assets and another billion in debt. The bankers who extended Revel extra credit last November must feel like schmucks. It’s a classic case of good money flung after bad.
State Sen. James Whelan was rather understating matters when he said, “It’s not a good day for Atlantic City. I feel very badly for everyone involved who [is] going to have to live with this hanging over their head. It has not worked out the way all of us have hoped.”
Revel was jinxed from the outset, when three top execs were killed in a July 31, 2008 plane crash. “Revel was initially billed as a glitzy resort featuring upscale restaurants run by Iron chefs, a swank 5,000-seat theater and 1,900 high-end hotel rooms. By the end of 2013, it had rebranded under the slogan ‘Gamblers Wanted’ and was being promoted as an affordable casino that offered low-cost food options, such as a $9.99 steak-and-shrimp special,” writes Reuben Kramer of its subsequent history.
As for the $261 million in tax givebacks that helped Revel make ends meet, that’s blown up in New Jersey‘s face. I doubt we’ll see a state do that again soon.
Although gambling revenue in the Northeast is on an upward trajectory, not all states are seeing a bigger slice of the pie. Established jurisdictions like Atlantic City have seen young whippersnappers like 
Maryland horn in on their action. Now, as gaming income tightens up, states are discovering that it’s not free money after all. Harrah’s Philadelphia was paying 20% of the city budget of Chester, but Harrah’s revenues have fallen 30% as competition has grown more intense. Similar problems have cost Delaware 538 public jobs. A 17% tax rate there is low to moderate by industry standards but, after losing $1 million in 1Q14, Dover Downs CEO Denis McGlynn is ranting about an “unworkable business model.”
Foxwoods Resort Casino CEO Scott “Woody” Butera nails it when he says there “is dramatic oversupply in the industry” at present. Connecticut, where Butera does business, is going to have to tighten its belt, what with its take of casino revenue falling 5% this year and expected to drop 20% next year. That’s cold. So it is in Rhode Island, where casino tax revenues are projected to decline $422 million over five years. As state budget officer Thomas Mullaney confesses, “We did kind of continue to pursue that easy money.”
Easy come, easy go.
Sad. Not good at all for AC.