New York investor Carl Icahn claimed that Atlantic City has lost its investment allure, when he announced the sale of the Trump Taj Mahal casino resort this February. The businessman blamed the New Jersey Senate and its President Stephen M. Sweeney for the city’s unfortunate fate.
However, the shuttered complex attracted a buyer almost immediately. And the buyer being Hard Rock International, a company that has made casino headlines over the past several months with its massive appetite for investment in different parts of the world, shows that Mr. Icahn may have actually undermined Atlantic City’s potential.
The city was the jewel of the US East Coast back in the 1970s, 1980s, and 1990s with its luxury casino resorts. However, the past several years have not been too glorious for the once major casino gambling hub. Atlantic City saw five of its 12 casinos close doors between 2014 and 2016, Trump Taj Mahal being one of those.
Multiple reasons can be listed as the main drivers of the catastrophe that befell the resort city and its gambling industry. It was four decades ago when New Jersey residents approved casino gambling in a statewide vote. In 1978, Resorts International opened doors on Atlantic City’s famed Boardwalk to become the first legal casino on the US East Coast.
More and more properties were added to the city’s skyline over the next decades. And for quite some time Atlantic City was a madly popular destination for casino gambling and entertainment. However, one major mistake may have predetermined its fate. The city made itself heavily dependent on its gambling industry and failed to secure other sources of income.
This is why the opening of casinos in other states across the eastern portion of the US came as a severe magnitude earthquake for Atlantic City. Casino patrons that had once been loyal to the popular hub found it an attractive opportunity to explore the newly offered casino options in other states. With the gradual expansion of the East Coast gambling market, Atlantic City found itself struggling to keep precious clientele.
And the period between 2014 and 2016 was clearly the hardest for the city. Losing five major properties showed just how bad things were. It showed that 12 casinos were too much for the city to sustain under current circumstances.
However, the legalization and regulation of online gambling and the rearrangement the city’s casino scene underwent have actually triggered its gradual recovery.
Latest figures published by the New Jersey Division of Gaming Enforcement show that operating profit generated by Atlantic City casinos increased 7.3% to $587.4 million last year. Here it is important to note that during its nine-and-a-half months of operation in 2016, Trump Taj Mahal reported operating loss of almost $5.6 million. Thus, excluding the gambling venue, which closed doors on October 10, 2016, the city saw operating profit rise 9% year-on-year to $593 million. Net revenue figures were also encouraging. Local casinos, excluding Trump Taj Mahal, generated $2.5 billion in 2016, up 3% from a year earlier.
According to New Jersey’s gambling regulator, the casino hub has finally begun regaining its footing after years of revenue declines. Reduced competition and Internet gambling were pointed to as the main reasons for the positive results in 2016.
And contrary to Mr. Icahn’s statement about Atlantic City’s diminished investment potential, several development projects have been undertaken in the city since the beginning of the year, including ones unrelated to gambling.
It became known in mid-March that the shuttered Atlantic Club Casino Hotel will be reopened as a family-friendly resort with no casino offering on property. Ronald Young, the venue’s new owner, is clearly indicating that it will be distanced from its gambling past.
Hard Rock International, the new owner of the former Trump Taj Mahal casino, is taking an exact opposite approach. The developer is determined to venture into what seems to be a reviving casino market and to possibly further contribute to Atlantic City’s revitalization. The rebranded Hard Rock Hotel and Casino Atlantic City is expected to be launched in the summer of 2018, so it is yet to be seen whether Hard Rock’s debut on the Atlantic City casino scene will be a successful one.
Given the current circumstances and analysts’ forecasts about the city’s further stabilization, the Hard Rock-branded property may indeed turn into a successful venture, if its owner makes a smart enough push. And bearing in mind Hard Rock’s overall experience in the industry, it probably knows how to make a smart push.
Anyway, despite its recent dark years, Atlantic City seems to be regaining its investment potential. And although it is no longer holding the East Coast casino monopoly, investing reasonably into the city can certainly help it maintain a good position in a casino environment with heavy and growing competition.
Follow us on Facebook and Twitter to keep up with the latest news from the global gambling industry.
