One of the seven pillars of New Jersey’s plan to restore prosperity to Atlantic City is rebuilding the strength of its casino industry.
Recent events show that’s going to be a challenge, with the outcome heavily influenced and perhaps even decided by forces outside the state’s control or influence.
Count billionaire hedge-fund manager Carl Icahn as among those forces.
He took over a bankrupt Tropicana Atlantic City in 2009 and turned it into the local industry’s second-highest gaming revenue producer.
Icahn’s attempt to revive the Trump Taj Mahal Casino Resort ran into opposition by state officials and a casino workers union, so he closed it and sold it to investors who have reopened it as the new Hard Rock Hotel & Casino Atlantic City.
The state and its union allies might have thought they wouldn’t have to deal with Icahn anymore, who once owned three other Atlantic City hotels but was down to just the closed Trump Plaza Hotel and Casino. But this year the famous activist investor has acquired a 17.75 percent stake in Caesars Entertainment, which with its Caesars Atlantic City, Harrah’s Resort and Bally’s Atlantic City is the largest casino operator in the city.
Icahn said his main goal is to bring about the sale or merger of Caesars Entertainment, one of the world’s largest gaming companies with 50 casinos in 13 states and a strong presence on the Las Vegas Strip. Two operators in Atlantic City — Golden Nugget Atlantic City owner Tilman Fertitta and Eldorado Resorts, which with a real estate investment trust bought Tropicana from Icahn — are said to be interested in a deal.
Icahn also wants better leadership of Caesars, which is seeking a new CEO, and favors Tony Rodio, who led the turnaround at Tropicana.
If Icahn has something in mind for the gaming giant’s Atlantic City properties, he’s not tipping his hand. State and city officials won’t see those cards unless he plays them. They may be sure, however, that he is completely focused on value for shareholders such as himself and the reinvention of Atlantic City only to the extent it serves that goal.
The trustee overseeing the city’s other new property, Ocean Resort Casino, offered some hopeful news this month — signs of an upswing in business and a pledge to maintain state requirements for cash on hand.
Future owner Luxor Capital plans to put $70 million into the property, and a marketing plan to launch in May will position Ocean Resort as competitive with the city’s customer-value properties but with resort amenities.
Between Icahn’s push for change at Caesars Entertainment and Ocean Resort’s reorganization, the state is facing a higher level of uncertainty regarding four of Atlantic City’s nine casino hotels.
State and city officials hope that someday a reinvented Atlantic City increases business levels, corporate results and jobs in their casino industry.
Until then, they’ll need to do what they can to help keep the industry’s revenue trending positively and its participants healthy and competitive.