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Will Atlantic City’s Revel casino get a second life?
August 12, 2014
By Jonathan Berr
Atlantic City’s $2.6 billion Revel Casino Hotel opened two years ago amid expectations it would transform the struggling Jersey Shore town, but it’s closing its doors Sept. 10 after failing to find a qualified bidder for the property in a bankruptcy auction. However, some advocates, such as Atlantic City Mayor Don Guardian, aren’t ready to write the resort’s obituary quite yet.
In a press release, Guardian said the city was “disappointed” by Revel’s decision “as there appeared to be several bidders for the property.” He added: “This might be Revel’s last chapter, but not the last one for this building.”
Sharing Guardian’s optimism is Dr. Israel Posner, who heads The Lloyd D. Levenson Institute of Gaming Hospitality & Tourism at New Jersey’s Stockton State College. He told CBS MoneyWatch, “I don’t think the fat lady has sung yet on this issue.”
Posner said he wasn’t aware of any investor or group of investors that might be interested in Revel. But just because Revel wasn’t successful as a casino “doesn’t mean it won’t work for any purpose,” he said. “There is nothing like it anywhere.”
A spokeswoman for Revel declined to comment beyond a statement issued earlier today announcing the closure. Revel is one of three properties in Atlantic City now slated to shut because a casino glut in the Northeast has caused their customer bases to dry up. The statement, however, left open the possibility that Revel could continue as something other than a casino, saying the company would continue searching for a buyer interested in pursuing such a strategy.
“We hope that Revel can be a successful and vital component of Atlantic City under a proper ownership and reorganized expense structure,” Revel’s statement says, adding that it was offering no assurances that its efforts would be successful.
If Revel goes dark, more than 3,000 workers will lose their jobs, and it wouldn’t be the only Atlantic City casino to go out of business this year. Showboat, which is owned by Caesar Entertainment (CZ), is due to close Aug. 31, followed by Trump Plaza on Sept. 16. Shares of Caesar’s were crushed this afternoon, tumbling more than 8 percent.
Revel’s history has been troubled from the start. Morgan Stanley (MS), one of the property’s original investors, walked away from the project in 2010, taking a write-down of about $1.2 billion. The Wall Street bank sold its stake to Revel’s developers. Republican New Jersey Gov. Chris Christie had arranged for Revel to get $260 million in tax credits to build the the resort. It has never been profitable.
Many casino industry observers faulted Revel for its business model, which placed more of an emphasis on luxury rather than gaming. The company decided to do without staples of other casinos, such as buffets, and it didn’t court day-trippers who visit Atlantic City via bus.
“Everything about that business plan was wrong,” said Alan Woinski, president of consulting firm Gaming USA Corp., in an interview. “Nothing made sense.”
Revenues at Atlantic City casinos have plunged 45 percent between 2006 and last year, to $2.86 billion in 2013. It’s a sure bet the declines will continue for the foreseeable future.

Doubling Down on Gambling in Atlantic City

July 6, 2013
By Kate Zernike
ATLANTIC CITY — Known simply as Revel, the newest addition to this gambling city was going to be different.
The emphasis was on luxury, with the Himalayan salt grotto in the spa, the botanic garden winding toward a rooftop pool, the Michelin chefs instead of all-you-can-eat buffets. There was no smoking in its 47 stories, and with floor-to-ceiling windows offering vistas onto the Atlantic Ocean, you could almost forget the seedier streets at its back. There was a casino, but it was self-contained on one floor, as if it were an aside. This was a resort, its promoters said, that happened to have gambling.
Little more than a year after opening, Revel is sorry. Deeply, dearly sorry.
And it is an expensive apology. As it fights its way back from bankruptcy, Revel announced that it would refund all slot losses and match all other casinos’ promotions for the month of July. Revel cost $2.4 billion to open and has spent millions more in recent months to install diner-fare restaurants, more slot machines and air filtration systems — because it now allows smoking, too. Buttons worn by employees and billboards along the Atlantic City Expressway declare its new slogan: “Gamblers Wanted.” And its new official name: Revel Casino Hotel.
It is just another spin of the wheel here, where the casino industry that revived an ailing beach resort a generation ago is now itself in need of reviving. Revenues have fallen 40 percent since their peak in 2006, as new casinos in neighboring states have taken away gamblers. Revel, hailed by Gov. Chris Christie as a “turning point” for the city when it opened in April 2012, lost $111 million its first year. And last year, Pennsylvania displaced Atlantic City as the gambling capital of the East, according to the American Gaming Association.
Mr. Christie came into office with a five-year plan to turn Atlantic City around, establishing a new tourism district and a $30 million marketing campaign to promote the city as more than just a gambling destination. “Do AC,” the ads encouraged, as casinos rushed to promote their nongambling attractions: concerts, shopping, a gay nightclub, the beach.
But now, the emphasis is on gambling again, as Revel attests. Mr. Christie, who offered Revel tax incentives to keep going when its financial backers threatened to halt construction, recently signed a bill allowing gamblers to place bets online to casinos here, and is in federal court fighting to bring sports betting.
The Do AC campaign is taking a pop-up mock casino on a road show, setting it up in Philadelphia, Baltimore and New York City to try to lure gamblers back to Atlantic City. Another casino, the Trump Taj Mahal, will bury vouchers worth $200,000 in the sand in September to try to lure the would-be lucky to dig them up — players will have to have their Trump players’ club card for a chance to win.
Above the banks of slot machines on Revel’s casino floor, signs promoting the new slots refunds declare “You Can’t Lose!”
“We’ve made a lot of mistakes,” said Jeffrey Hartmann, the interim chief executive brought in from Mohegan Sun in Connecticut to lift Revel’s fortunes. (The company entered bankruptcy in March and emerged 57 days later.) “We’re asking our customers for a second chance.”
“To quote ‘The Godfather,’ ” he added, “we wanted to make them an offer they couldn’t refuse. If this doesn’t get to them, nothing will.”
Randall Fine, whose marketing company was brought in to help Revel, said that in 83 years of gambling, no casino had ever offered to refund slot money — and little wonder, given that the rule of thumb had been that casinos make 80 percent of their profits on slots.
He could not say how much the refund would cost. But, he said, “If it costs us something, it’s because it worked.”
That is because the refunds are not automatic: players have to sign up for a Revel card — a sort of rewards program — to get the money back. They have to lose at least $100 on slots. And the refunds will be put on the card, parceled out in weekly increments for a 20-week period beginning in August.
On the floor last week, this caused some grousing that “they’re not cutting us a check,” as one man said. Still, people had begun lining up on the newly expanded casino floor at 8:30 Monday morning — the first day of the promotion — to get their Revel cards.
By late afternoon, the casino floor was buzzing compared with a normal Monday. “I couldn’t believe it, we came down the escalator and there’s people,” said Linda Walling, a retiree who comes to Atlantic City weekly with her husband, Richard, from their home in central New Jersey.
“It’s a gorgeous, gorgeous resort,” she said. “It doesn’t feel like you’re in Atlantic City, it’s more like Vegas.” But for all its sleek loveliness, she said, “We’d be walking past the restaurants, there’d be 100 employees and nobody in there. You walked down the escalator looking at the machines in the casino and it was empty.”
Looking around a new lounge catering to high-rolling slots players, she declared the new moves to be “going in the right direction.”

Revel casino recovery plan OK’d by NJ regulators; smoking ban abandoned
May 15, 2003
By Asbury Park Press
ATLANTIC CITY — Revel was given a second chance Wednesday from New Jersey casino regulators, and now it’s seeking the same thing from customers.
In winning a reprieve, the bankrupt casino acknowledged several big mistakes, including preventing its guests from smoking; not paying enough attention to slots players; and booking too many hip acts at the expense of other forms of entertainment.
The state Casino Control Commission approved Revel’s reorganization plan, which will eliminate $1.2 billion of its $1.5 billion in debt by giving lenders an 82 percent ownership stake. That plan was approved by a bankruptcy court judge on Monday, and Revel anticipates formally emerging from bankruptcy on Tuesday.
“Everybody deserves a second chance,” said Jeffrey Hartmann, Revel’s interim CEO. “We’re looking for a second chance. We are trying to listen to and respond to customers. We probably didn’t do a great job of that last year.”
Regulators’ approval did not come easily, as commissioners and a representative of the state Division of Gaming Enforcement expressed serious concerns about Revel’s ability to turn itself around and save its 4,600 jobs.
“Absent a significant increase in slot revenues, Revel is still going to be in trouble,” said Jack Adams, a deputy attorney general. “Revel will still struggle to survive in this market. Can there be this turnaround, and can it happen when Revel says it will?”
Revel posted a $149 million operating loss from its April 2, 2012, opening through the end of March 2013. It has ranked near the bottom of Atlantic City’s 12 casinos in terms of the amount of money won from gamblers.
When it emerges from bankruptcy next week, Revel will carry $272 million in debt. Yet it still does not expect to turn a steady profit until the summer of 2014, said Dennis Stogsdill, Revel’s chief restructuring officer.
“There is some agita about whether we have enough money,” he said, using the Italian slang term for being anxious and potentially nauseous. “We always want more money. Where I sit today, I feel confident it’s enough.”
Matthew Levinson, the commission’s chairman, called Revel’s financial forecasts “aggressive,” and said there are uncertainties surrounding them.
The casino predicts its net revenue will rise from $152 million last year to $256.4 million this year, $322.8 million in 2014 and $378.9 million in 2015. Revel also submitted documents predicting it will reduce last year’s operating loss of $111 million to less than $43 million this year. But Revel already has lost more than $38 million in just the first three months of this year, meaning it must lose only $4.4 million in the following nine months to meet its own target.
The Gaming Enforcement Division cited many instances of Revel’s financial projections being three or more times what their actual performance was. It said management’s inability to accurately predict operating results remains a major issue, calling the projections “consistently unreliable.”
Revel has secured $350 million in exit financing for when it leaves bankruptcy court, including a $75 million fund for working capital, and a $275 million term loan.
Revel officials also confirmed that the casino will begin to allow patrons to start smoking in as little as two or three weeks, once plans are submitted to state and city authorities and additional ventilation equipment is put in place. That marks a reversal from Revel’s initial policy and a tacit admission that what it thought would be a selling point — being the only smoke-free casino in Atlantic City — has actually hurt business.
Questioned about Revel’s finances once it emerges from bankruptcy, Stogsdill said the business has other options it can pursue if revenue doesn’t meet projections. The casino recently laid off 83 employees, and Stogsdill said it is changing the way it schedules employees to save money.
“Fewer employees in the (teller) cage, using fewer dealers during slow times, reducing our utility costs,” he said. “We’re going to change out the light bulbs in our parking lot to LED lights for a savings of $400,000 a year.”
Hartmann said Revel is even scrutinizing how it purchases water with an eye toward saving money.
He said the casino will refocus itself on gambling this year; when it opened last year, Revel repeatedly branded itself not as a casino resort, but as a resort that just happened to also have a casino. The difference has been big for many customers, who he acknowledged may have tried Revel once, didn’t like it all that much and haven’t returned.
“It starts with a sense of urgency,” Hartmann said. “This is a critical summer for Revel. I can’t tell you the sense of urgency I am stressing with our staff. Be ready with service. Be ready with attention. We’re going to retain customers this year.”
He also said Revel plans a much wider variety of acts in its 5,500-seat Ovation Hall concert facility, which was christened by Beyonce and hosted acts including Kanye West and AVICII last year. In 2013, country acts and comedians will be added to the mix, he said.

So with over a dozen casinos in AC, there weren’t enough nonsmokers who hated smoke so much to make even a single casino viable??? And yet the Antismokers insist, over, and over, and over again, that smoking bans don’t hurt business.??
And just last week the heads of the antismoking groups in St. Joseph, Missouri emotionally raved to the City Council that not only do bars and casinos survive smoking bans, they do BETTER with smoking bans!? And yet… not enough customers to fill even ONE casino in Atlantic City.
So… somebody must either be incompetent, or they are lying.? Which is it?? The Antismokers who make these proclamations have all kinds of information and statistics at their fingertips they love to recite, so they can’t really claim simple ignorance.? They *could* be incompetent, but a lot of them have Ph.D.s? (When you hear them making health claims and they have a “Dr.” before their name, double check it: I’ve some out there, one just this week, whose claim to being? Drs. lie in Ph.D.s in “Mechanical Engineering” or “Educational Leadership.”? Seriously.)?
And these people pull in humongous amounts of money to push smoking bans on people who don’t want them enough to simply walk to a casino a few feet away from the smoking ones that they’re in.
So… if it’s not ignorance, and it’s not incompetence…? You be the judge: WHY do they make these claims, AND… are they lying??
Read? “V.Gen5H” and read “The Lies Behind The Smoking Bans” and see what else they’re lying about.

NJ’s bankrupt Revel suffers fate of other casinos
ATLANTIC CITY, N.J. (AP) — From the day it opened last April, Revel insisted it was a different kind of casino.
It shunned bus-riding day-trippers, banned smoking, hired a mostly nonu nion workforce and told employees they’d have to reapply for their jobs every five years or so. It concentrated on the well-to-do leisure traveler and the business client instead of the slot-playing granny and opened up views of the ocean with floor-to-ceiling windows in a seaside resort where everyone else sought to keep gamblers focused on gambling.
Yet less than a year after it opened, Revel finds it has become like many other Atlantic City casinos: drowning under way too much debt, fighting for a share in a shrinking market and preparing for a date in bankruptcy court with major questions about its future looming large.
Revel said Tuesday that it will file for Chapter 11 bankruptcy protection in late March. The voluntary, prepackaged bankruptcy will wipe away about two-thirds of its $1.5 billion in debt by converting more than $1 billion of it into equity for lenders.
Kevin DeSanctis, Revel’s CEO, said the restructuring will give the casino resort more flexibility to operate, calling it “a positive step for Revel.”
“The agreement we have reached with our lenders will ensure that the hundreds of thousands of guests who visit Revel every year will continue to enjoy a signature Revel experience in our world-class facility,” he said.
Existing management will remain in place, no layoffs are planned, and employees and vendors will be paid as usual, the company said. The restructuring should be completed by early summer.
The $2.4 billion casino never caught on as much as it had expected to, and it remained mired toward the bottom of Atlantic City’s 12 casinos in terms of casino revenue. Revel had to line up two rounds of additional financing since August to keep operating.
In January, it posted its second-worst month, winning less than $8 million from gamblers. During the second and third quarters of last year, it reported gross operating losses of $35 million and $37 million.
Revel’s largely nonu nion stance earned it the undying enmity of Local 54 of the Unite-HERE u nion, representing most of the city’s casino workers.
“Over three years ago, Local 54 began expressing to every elected official in the city, the state and the governor’s office that this project was doomed to failure,” said Bob McDevitt, the u nion’s president. “Had they listened to us three years ago, we would not have this catastrophe on our hands now.”
Michael Drewniak, Gov. Chris Christie’s press secretary, expressed confidence in Revel.
“We are committed to the resurgence of Atlantic City, the tourism district, and the many efforts currently under way to bring world-class attractions and entertainment to the city,” he said. “A rejuvenated Revel will remain an integral part of that landscape, as it continues full operations as a premiere hotel, gaming and top-flight entertainment hub for the city, in addition to employing more than 2,000 people. Most importantly, none of those things that make Revel among Atlantic City’s highest-profile attractions will change, as Revel uses this new financial flexibility and the continued backing of its investors to grow the business and be part of Atlantic City’s expansion.”
David Rebuck, director of the state Division of Gaming Enforcement, said the Chapter 11 filing needs to happen.
“The agreement between Revel and its lenders will allow for a necessary financial restructuring and improve the property’s financial condition going forward,” he said. “We see this as a positive step that will allow Revel to comprehensively address its financial needs while continuing normal business operations.”
It is the latest in a series of recent bankruptcies involving Atlantic City casinos. Trump Entertainment Resorts emerged in 2010 from the third Chapter 11 bankruptcy that it or its corporate predecessors had filed, and the Tropicana Casino and Resort was sold that same year out of bankruptcy court to billionaire Carl Icahn.
As part of the restructuring, some of Revel’s lenders will provide approximately $250 million in debtor-in-possession financing, about $45 million of which constitutes new money commitments and approximately $205 million of which is prepetition debt. No taxpayer funds will be used to finance the restructuring, the casino said.
The company didn’t identify which lenders will be part of the filing; it said only that “a majority” of its lenders have agreed.
Revel was the first new casino built in Atlantic City since the Borgata Hotel Casino & Spa opened in 2003.
It was an ambitious, risky project in a declining market. It saw itself not as a casino resort but as a resort that happened to have a casino. But the distinction seemed to have been lost on many customers, who found its restaurants and hotel rooms pricey.
The project had to overcome numerous obstacles before its opening. Three key executives working on the project died in a Minnesota plane crash in July 2008; a worker pouring concrete was struck by lightning and killed in 2011.
The project ran out of money during the recession and had to stop construction halfway through. Morgan Stanley pulled out, taking a $1.2 billion loss on the project. It only got completed with the help of state tax incentives that were approved in February 2011.

November 23, 2008

Dear Editor,
I found it interesting that the casinos’ profits are down 22% and they’re blaming the economy and competition as well as the smoking ban.
Why did I find it interesting?? Because Minnesota’s casinos’ revenues ALSO fell by 22%… except that was a fall over a five year period ending in 2007, and it was a fall that had only one thing in common with Atlantic City’s: a smoking ban.?? If you look at the official Minnesota Charitable Gambling Report covering the period 2003 to 2007 you see a sharp distinction between the two years prior to their ban and the 33 months of their partial smoking ban.? You then see an even sharper distinction in the last three months of 2007 after a full ban came in: a drop in December’s revenues between 2003 and 2007 of….? 22%.???
Of course once you figure in inflation and general industry growth in non-banned states, the real figure is even worse: somewhere on the order of 30%.
The economy and competition may indeed be having some impact on Atlantic City, but it’s the smoking ban, even just the partial ban that discourages gamblers from visiting because there’s no place to relax and chat after a meal with a glass of wine and a cigar or cigarette, that is killing the casinos and the lives, livelihoods, and taxes that are dependent on those casinos.
Atlantic City’s smoking ban will ultimately cost taxpayers not just millions, but literally hundreds of millions of dollars in lost revenue, and you can bet your bottom casino dollar that it won’t be the lawmakers or the antismoking organizations that will pay the bill.

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