Revel Casino Files for Bankruptcy
Atlantic City’s Revel Casino filed for bankruptcy protection and sent a letter to employees warning of a possible shutdown if a new buyer fails to come forward.
The latest chapter 11 filing occurred late last week and is the casino’s second since opening in April, 2012. The first time that the Revel Entertainment Group sought relief in bankruptcy court was in March, 2013. Those proceedings were over two months later but the problem of generating enough revenue to survive was not.
Almost 3,200 workers are employed at Revel and they were put on notice that the casino may be forced to close toward the end of the summer if a new owner with “the ability to provide the funding and long-term commitment” does not emerge, the Press of Atlantic City reported. Casino employees were warned in advance due to legal requirements.
The casino will continue operating while its fate meanders through bankruptcy court as financing to carry on in the short term has been arranged. That includes providing paychecks to employees. But the newest round of bankruptcy proceedings is designed to find a buyer.
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New Jersey Senator Jim Whelan called the filing
not a good day for Atlantic City, as the Revel has failed provide a spark to the gaming industry that state officials had hoped for. The Garden State is in the midst of a seven-year slump with regard to land-based casino revenue that was brought on mainly by competing casinos popping up in nearby states.
The 47-story Revel Casino Hotel opened to considerable fanfare as a high-end gaming establishment with fancy restaurants and hotel rooms geared toward the more affluent. Barely a year after its grand opening, its marketing strategy was restructured in order to appeal to a more budget-minded clientele. But losses continued to mount, leading to its current situation that requires a bailout in order for the casino to remain open.
Another New Jersey casino, the Atlantic Club, closed its doors in January after filing for bankruptcy last year. New owners were found via a joint bid by Caesars and Tropicana, who had no intention of reopening as a casino. The Atlantic Club has since been sold once again to a Florida firm that is reportedly eyeing the property for residential use.
The Atlantic City casino industry now consists of 11 casinos, but that number is in jeopardy of being reduced. In addition to the possibility of the Revel joining the Atlantic Club in shutting down this year, Caesars executives have recently stated that the closure of one of its four casinos may be on the horizon.
Caesars operates Bally’s, Harrah’s, Showboat and Caesars Atlantic City. Operating losses have forced the company to take a long look at the bottom line, with industry insiders suggesting that Showboat is the most likely candidate to fold up its tent amid mounting debt.