ATLANTIC CITY — The proposed reopening of a casino at the shuttered Revel megaresort could put the city’s fragile gaming industry under more unneeded stress, financial analysts said.
Already facing the threat of two possible casinos in North Jersey and the opening of eight more in neighboring states over the next couple of years, the city’s eight remaining casinos could face more competition from inside its own borders.
Polo North Country Club Inc, the company owned by Glenn Straub, has said it plans to lease out casino operations at the site.
ATLANTIC CITY — Glenn Straub rides an elevator at Revel clutching a walkie-talkie and flashlight.
“The market has been rightsized,” said Colin Mansfield, associate director of the U.S. Corporate Finance group at Fitch Ratings. “But any more competition in the city would take shares from the existing properties.”
Two years ago, the casino industry in the city was decimated by the closings of Showboat Casino Hotel on Aug. 31, Revel on Sept. 2 and Trump Plaza Hotel and Casino on Sept. 16. When the dust settled, more than 5,000 employees lost jobs. On top of that, the Atlantic Club Casino Hotel closed earlier that year, taking with it 1,600 jobs.
The closings came as a result of supply outpacing demand, analysts have said.
“When you have contracting demand and increased supply, that is not a good thing,” said Andrew Zarnett, a managing director at Deutsche Bank Securities, where he also serves as the company’s gaming, lodging and leisure high-yield debt analyst. “Over the last 10 years, gaming revenues have dropped by 50 percent, but that number is close to 60 percent with inflation.”
While supporting new hotel rooms in the city, Steve Callender, general manger of Tropicana Atlantic City, said the city’s gaming industry has stabilized.
“There seems to be enough gaming,” he said. “If you look at the gaming numbers, everyone seems to be doing well now. We are rightsized from a casino standpoint.”
Polo North bought the $2.4 billion Revel complex for $82 million from bankruptcy court. When the complex is finally opened, visitors will be able to partake in scuba, windsurfing and cooking lessons, spa treatments, a zipline, a ropes course called Skytrail and a 13-floor endurance bicycling course, Straub says. He also has said he plans to open 900 of the hotel’s 1,600 rooms for customers.
State gaming officials told Straub last week he is required to apply for a license to operate a casino on the property. Straub claims that since he is leasing the casino area out to a third-party vendor, he should not be required to apply for the license. Straub plans to lease out the hotel and casino operations to separate vendors.
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“The division continues to work with Polo North and its gaming attorney to secure all appropriate licenses and authorizations,” said Kerry Langan, spokeswoman for the state Division of Gaming Enforcement. “The division cannot comment on specific details regarding ongoing investigations.”
Straub has said state regulators are holding up the opening of the casino.
“Instead of welcoming this prospect, New Jersey’s Division of Gaming Enforcement has imposed a roadblock that is inappropriate and unnecessary,” according to a statement from Polo North. “Despite Polo North only being a landlord, the division is requiring it to comply with the more extensive licensing standards imposed on casino operators as opposed to the less stringent standards imposed on vendors. This requirement is being imposed even though the proposed tenant will meet the licensing standards for casino portion of 6,000,000-square-foot property.”