TRENTON – It was heralded as the next big thing for Atlantic City.
It would be a turning point of sorts. The South Jersey city – long plagued by corruption, crime, and dwindling gaming revenues thanks to parlors in other states – would become a destination where people would catch a show and spend the night, and eventually Atlantic City would shed its reputation as a day trippers’ mecca.
But with officials from Revel – Atlantic City’s upscale resort $2.8 billion, 53-story, 3,800 room hotel and casino, that opened to much fanfare last year – saying late Tuesday it would seek bankruptcy protection to relieve itself of billions of dollars of debt, has the state’s vision taken a black eye?
Not at all.
Lawmakers said the bankruptcy protection is merely a tool Revel is using to help it improve its chances for future, consistent success. And unlike a traditional Chapter 7 bankruptcy, which often means an entity is going out of business, Revel is seeking Chapter 11, which means a restructuring of its finances.
A lot of debt will be relieved in exchange for the lenders to have an ownership stake in the lavish Revel.
Among some lawmakers, no panic buttons are being pressed just now.
Assemblyman John Burzichelli (D-3), Paulsboro, who authored a bill – now law – to provided Atlantic City casino visitors hand-held gaming devices, said Revel’s move is not unusual, adding that it needed to do this to reduce its debt load.
He pointed out that the Donald Trump-owned casino Taj Mahal sought bankruptcy protection previously. That casino, built in the early 1990s, is still in operation.
“These kinds of financial maneuvers are not uncommon,” Burzichelli said. “(The move) will probably ensure its longevity.”
Sen. Jim Whelan (D-2), a former Atlantic City mayor, also pointed out casinos have previously gone through bankruptcies, calling Revel’s move “a fairly standard procedure” that will enable it to continue operating and not lay off employees.
That being said, Whelan said it might be time for Revel to change the way it does business and adopt more conventional measures, such as offering complimentaries, a staple for many casinos to retain customers, among other things.
“Without the burden of the debt and a new approach, they could still turn this around,” Whelan said.
Analysts also point out that Revel is largely succeeding in the area where it primarily focused: getting people to spend the night in Atlantic City. While it performed consistently poorly in gaming revenue, hitting a new low last month, finishing 11th out of 12 casinos, nongaming sectors have done much better.
Israel Posner, executive director of the Lloyd D. Levenson Institute of Gaming, Hospitality and Tourism at Richard Stockton College, said the bankruptcy filing will enable it to maintain its operations and existing work force, as well as continue pursuing its aggressive marketing campaign.
A typical visitor will not notice any major changes as a result of this move, he said.
“A.C.’s model for many years was its singular focus on gambling.”
Posner is confident Revel will rebound.
“It’s growing pains,” he said. “It’s the first property that didn’t focus solely on the casino floor.”
While Revel has done relatively well in non-gaming sectors of revenue that are produced via lodging, restaurants, conventions, conferences, and large weddings, Posner said it would certainly be in Revel’s favor to focus more on the gambler.
But if you talk to North Jersey lawmakers, such as Assemblyman Ralph Caputo, D-28, Belleville, who served as vice president for several Trump casinos in Atlantic City, the business model must change for Atlantic City and the state to succeed. He questioned the whole move of making Atlantic City more than meets the eye.
“Atlantic City is not a resort,” he said. “It was a resort for a hundred years; it wound up becoming a swamp.
“The gamblers from North Jersey and New York, (in other states) they’re sucking up the market that previously went to A.C.,” he added.
Caputo re-emphasized the need to put his resolution, ACR53, which would amend the Constitution to allow casino gaming outside of Atlantic City, on the ballot.
“At this point, I believe, based on what happed to Revel and the revenue projections, that it’s time to reassess our position on gaming in the state.”
“Hundreds of millions of dollars in revenue is leaving the state,” he said. “It’s just common sense that the convenience gambler is not going to travel three hours when they have other options.”
Assemblyman Albert Coutinho, (D-29), Newark, believes Revel seeking bankruptcy will help provide it long-term viability in helping it remain a “world-class facility.”
He added that it’s only a matter of time before casino gaming extends beyond Atlantic City.
“I do believe there will come a time when a casino in North Jersey is inevitable,” he said.
To not appear as if they are anti-Atlantic City, both Coutinho and Caputo have suggested having casinos built up north, but ultimately managed by Atlantic City, as part of a consortium.
But Whelan doesn’t think expanding New Jersey casino gaming outside Atlantic City would help.
“I think it would only exacerbate the problem and further diminish the New Jersey market.”
At a press conference earlier today, Gov. Chris Christie expressed commitment to Revel and said it still will be responsible for helping to turn Atlantic City around.
Senate President Steve Sweeney issued a statement expressing his disappointment.
“This is certainly disappointing, but it is not unexpected,” he said in a release. “Management at Revel has made mistakes since day 1. I informed and asked Division of Gaming Enforcement Director David Rebuck to look into these issues on more than one occasion. Those concerns were apparently ignored. In the meantime, everyone else saw Revel’s problems and told them they had to change. I guess this is their idea of change.”
But Sweeney also acknowledged what other lawmakers have said: that horses can’t be changed mid-stream.
“The bottom line is that we have to make Revel work. It is too important to Atlantic City and the surrounding area not to see it turn around. Whether that turnaround happens through this bankruptcy filing, new management, or both, remains to be seen. But something has to change.”
The Casino Control Commission said it’s monitoring the situation.
“The state has been monitoring Revel’s financial situation closely since its opening last year and is aware of its intention to financially restructure,” N.J. Casino Control Commission Chairman Matthew Levinson said in a statement. “This move will place Revel on firmer footing and help to support its long-term success.”