So long, Showboat

Normally, when a federally mandated WARN Act notice goes out to casino employees, executives downplay as a mere formality. Not so for Showboat Atlantic City where theoretical closure became actual shutdown in less than 24 hours. Despite having recently posted an operating profit for Caesars Entertainment, Showboat will be sacrificed to prop up Harrah’s Resort, Caesars Atlantic City and Bally’s Wild Wild West. The move comes at a time when Caesars has been tipped as a suitor for Revel Casino Hotel, is blithely talking about borrowing $5 billion and throwing it into Japan and is bidding for a New York State casino. The latter involves a certain amount of realpolitik (if Empire State money is going to flow upstate and away from Atlantic City, it makes sense to be positioned to get at it) but it will act further to the Boardwalk’s detriment. It’s also cold comfort to the 2,100 employees who will have to hit the bricks on Aug. 31.

Unite-HERE boss Robert McDevitt was at an uncharacteristic loss for
words. All he could manage was, “I’m heartbroken and angry, too angry to respond in an effective way.” Caesars was comparatively glib, saying, “We sincerely appreciate the service, dedication and professionalism shown by the employees of the Showboat over the years to provide our customers with incredible experiences.” CEO Gary Loveman tried to shift the blame to Atlantic City property tax rates. Wrote Deutsche Bank analyst Carlo Santarelli, “ the decision to close the property comes as a surprise given it ranked 7th ($193 mm in 2013) in gross gaming revenue last year and is again 7th in the YTD 2014 ($66 through May).

Furthermore, the property actually generated positive gross operating profit in 2013 ($1.5 mm), making it one of just 5 of the 12 properties to do so. Clearly, the Showboat is not the worst asset from a financial perspective in Atlantic City, and, from an aesthetic perspective, it is likely one of the fresher Boardwalk assets.” He predicted a $155 million tax shortfall for New Jersey and renewed pressure for a casino at the Meadowlands: “we believe the decision to close it will … further reinforce the need to diversify gaming away from Atlantic City.”

“I’m not sure I ever want to work in the casino industry again. I want to find something more stable,” said one disillusioned worker. At this very moment, Atlantic City Mayor Don Guardian is addressing the issue* and employees will stage a protest later today. One wonders if the tenor of Guardian’s remarks will differ from those of area legislators, who are greeting the news with varying degrees of resignation.

(* — “Atlantic City is creating new jobs, building new attractions and diversifying our economy beyond just gaming. Atlantic City’s best days are still ahead,” said Guardian, striking a note of forced optimism. “Today’s announcement was an expected curve in the road. We are taking every turn head on and will continue to move forward.”)

Meanwhile, Loveman’s vanity lawsuit against Massachusetts Gaming Commission Chairman Stephen Crosby continues to sputter forward. Caesars will attempt to refile what was recently tossed as a collection of “naked assertions” and “sensational accusations.” Perhaps Caesars should look at the upside: If casino gambling is repealed in November and Loveman were still doing business in Massachusetts, how would it feel to be chased from his home state by the electorate?