Facing a key deadline, the Atlantic Club Casino Hotel plans to stay in business for the foreseeable future despite mounting losses and lower revenue from its slot machines and table games.
New Jersey gambling regulators secured a commitment last year from Atlantic Club’s parent company, Colony Capital LLC, to keep the casino open at least until Oct. 31, 2012.
With that deadline fast approaching, casino officials say that not only will it remain open past Oct. 31, but it already is offering hotel, dining and spa packages through the end of the year.
“It’s business as usual. As of Nov. 1st, nothing is changing,” Atlantic Club spokeswoman Cathleen Kiernan said, declining further comment.
Atlantic Club is in the midst of a turnaround plan that includes a new marketing strategy that touts the Boardwalk property as a low-cost alternative to Atlantic City’s other casino hotels.
Formerly known as the Atlantic City Hilton Casino Resort, the casino was forced to rebrand itself as “ACH” after it lost the rights to use the famous Hilton name last year.
The ACH moniker was ditched last March, when the casino renamed itself the Atlantic Club and began a marketing strategy catering largely to cost-conscious local customers. Atlantic Club advertises free parking, low-stakes wagering and discount restaurant prices — all in the hope of positioning itself as an “affordable” casino.
Fighting for survival, the property won New Jersey Casino Control Commission approval last year to restructure itself. The rescue plan included a $24.3 million investment by Colony Capital and a commitment to keep the casino open at least until Oct. 31, 2012.
Matthew Levinson, the commission’s chairman, said regulators are well aware of the Oct. 31 deadline and will continue to monitor the Atlantic Club’s financial performance. He added that the commission is ready to take “any appropriate action as required and warranted.”
When it approved the then-ACH’s restructuring plan last year, the commission imposed a series of financial requirements, including the submission of weekly and monthly reports.
The New Jersey Division of Gaming Enforcement, which oversees the day-to-day operations of the casino industry, indicated that there was never really a serious concern that the Atlantic Club would close.
“The division never had any information indicating that Atlantic Club would not continue in full operation and therefore there was no reason for them to notify us,” spokeswoman Lisa Spengler said.
The casino first opened in 1980 as the Golden Nugget under the ownership of Las Vegas gambling mogul Steve Wynn. When Wynn sold the casino in 1987, it began a succession of owners and name changes until Colony Capital took over in 2005. Colony tried selling the casino last year, but found no buyers. First as the Hilton and now as the Atlantic Club, the casino has struggled against its Boardwalk rivals.
Despite Atlantic Club’s new marketing strategy, the casino has suffered a 13 percent drop in gambling revenue through the first nine months this year, compared with the industry’s average decline of 5 percent. Through the first six months of the year, Atlantic Club suffered an $11.2 million operating loss, compared with a $10.8 million operating loss during the same period in 2011.
“It will take a lot of time to get out from the hole they’re in. But indications are that they will continue to run as an ongoing concern and the business levels are enough to keep things going,” said Bob McDevitt, president of Local 54 of UNITE-HERE, Atlantic City’s largest casino union.
The Division of Gaming Enforcement is scheduled to release the casino industry’s third-quarter operating results in mid-November. The third quarter includes the summer months, usually the best moneymaking time for the casino industry. It will be a key indicator whether Atlantic Club’s new marketing strategy has finally begun turning things around.
“Anecdotally, the evidence I get from union members is that it is a much busier property and that it does seem to be working,” McDevitt said.
McDevitt’s union represents about 600 bartenders, cocktail servers, cooks, housekeeping staff and other service workers at the Atlantic Club. The union negotiated a new three-year contract with the casino last March. As a safety net in the new contract, Local 54 workers would each be given a $1,500 cash payment if the Atlantic Club shuts down.
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