ATLANTIC CITY, N.J. – One casino in the nation's second largest gambling market is being run by a state trustee, another may be foreclosed on and three others are facing down bankruptcy.
Hope for Atlantic City always seemed to keep flickering, though, as long as Revel Entertainment forged ahead building a $2 billion casino and hotel.
No more. The company this week laid off 400 of its 1,100 workers and stopped work on the interior of Revel," its first-ever project, reflecting the broad decline under way in national and global gambling markets.
"This is a blow to Atlantic City's psyche," said Joe Weinert, senior vice president of Spectrum Gaming Group, a New Jersey casino consulting firm. "After enduring a series of difficulties throughout 2008, Revel stood out as a rising symbol of better times to come in the very near future.
"Unfortunately for the city and its gaming industry, the project — like many others from Las Vegas to Connecticut to Macau — is a victim of the recession," he said. "The good news is that Revel seems committed to ultimately seeing this project through."
This week's cuts add Revel — an Atlantic City company partnered with Wall Street's Morgan Stanley — to a long list of companies that hoped to participate in the biggest expansion of gambling in Atlantic City since it was legalized here 31 years ago. Gambling's decline in Atlantic City is almost as pronounced as in Las Vegas, home to the world's four largest gambling companies.
In Atlantic City, Pinnacle Entertainment has been sitting on prime Boardwalk real estate since it imploded the historic Sands Casino Hotel in October 2007. The project is on indefinite hold, and Pinnacle has said it might sell the land if a buyer materialized.
"Even when the markets recover — and we don't know when that will happen — Atlantic City will face some real long-term challenges, including the new competition in Pennsylvania, New York and elsewhere," said Pinnacle spokeswoman Pauline Yoshihashi.
MGM Mirage Inc. has shelved plans to build a $5 billion casino-hotel complex on land next to the Borgata Hotel Casino & Spa in Atlantic City's marina district that would have been the city's largest. It also delayed finishing a boutique hotel at its $8.6 billion CityCenter development in Las Vegas and canceled 200 condominiums there.
Las Vegas Sands Corp. has suspended construction at two sites in the Chinese island enclave of Macau and delayed projects in Las Vegas while it pursues roughly $881 million in financing. Harrah's Entertainment Inc. indefinitely suspended plans for a 660-room tower at Caesars Palace on the Las Vegas Strip, and Boyd Gaming put its $4.8 billion Echelon project there on hold, too.
Atlantic City's casinos won $4.55 billion from gamblers last year, down 7.6 percent from 2007. Las Vegas saw revenue fall 9.3 percent in the first 11 months of last year compared with the year before. Full-year figures are due out soon.
Gambling revenue for casinos across the United States dropped $1.1 billion, or 3.6 percent, to $30.2 billion in the first 11 months of 2008 compared with the same period in 2007, according to the American Gaming Association.
In another sign of the industry's tumble, casino game maker International Game Technology, based in Reno, Nev., announced Thursday that it will cut 200 jobs in its manufacturing operation, on top of a November cut of 500 jobs, for a total trim of 10 percent of the company's work force.
Revel CEO Kevin DeSanctis said the company remains committed to finishing the project, saying its opening will be pushed back "a little bit" from July 2010. The company — which gained renown for persisting despite the recession and the deaths of three executives in a July plane crash — needed to use its cash on hand as efficiently as possible over the next year to 15 months, he said.
"Should we acquire the financing to complete the project, we'll restart the interior," DeSanctis said. "But in today's world, there's no guarantee of anything."