Atlantic City Sees Credit Rating Jump
Due to troubled finances, Atlantic City has been under state control for about a year now. The gambling resort town struggled so much that the state government fought to gain control of their operations, including how money was spent. While the city is still under the state government’s thumb, their credit rating is up.
According to Moody’s Investors Service, the city’s credit rating increased from a B2 to a Ba3. They now have a stable outlook. The rating is still below investment grade, but it is a whole six notches higher than what the city had in a few years ago when they reached a bottom Caa3 rating.
Moody’s stated that the city as well as the state have been able to take steps to address the financial situation in Atlantic City. The oversight of the state is critical to the continued well-being of the city. The state takeover will expire in two years and according to Moody’s the future of the state remaining in power is yet to be determined and the decision to allow the state or city to be in charge will be important to the credit quality of the city for the future.
Atlantic City was in dire need of help a few years ago as four casinos shutdown in 2014 and one more in 2016. The tax revenues started a downturn at this time and help was needed to get the city back on track.
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It was in January of 2019 that the administration of Governor Chris Christie was given the authority to take over control of Atlantic City. The state’s Local Finance Board voted 5 to 0 in approval of the takeover. According to Christie, the takeover was the best option for the city to avoid filing for bankruptcy.
With the change, the state has been able to obtain the power to assume the functions that are normally controlled by local leadership. This includes hiring and firing employees, renegotiating contracts with unions, selling assets of the city and more.
Atlantic City has been doing well since being under state control. Before the state took over, the online gambling industry was giving the area a much-needed push in revenue totals. The online gambling industry has been a lifesaver for the region, having provided tens of millions in revenues month after month.
The online gaming revenues have helped the land-based venues to stay afloat and to venture into other areas, such as sports betting. Online gambling came on board in 2013 and has continued to grow year after year.
Even after the casinos shutdown in 2014, the state was able to stay afloat due to the iGaming revenues coming in. Over the past few years, Atlantic City casinos have went from earning $30+ million a month in online gaming revenues to the $50 million range.
Last year was a phenomenal year, as the region continued to break record after record each month due to new gains in iGaming traffic. The Golden Nugget is at the top of the pack, bringing in over $15 million a month by themselves!
All eyes are on New Jersey as 2020 begins, to see how the online gaming industry fares. Will they continue to increase revenues month after month? Or will the industry begin to slow down?
For now, Atlantic City is doing well, earning a solid credit rating and getting back on track for financial success. It will be interesting to see if the state maintains control or if Atlantic City will be given some leeway in the future.
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