Gambling Towns: Winners and Losers
1) Atlantic City
The Jersey Shore town's perpetual woes reached a new rock bottom this summer when four casinos--the Atlantic Club, Showboat, Trump Plaza and Revel--announced they would close. But there were hints of optimism this month when Brookfield Asset Management bought the bankrupt Revel for $110M, a pitiful fraction of the $2.4B it cost to build before opening to great fanfare (including a Beyonce concert attended by Michelle, Sasha and Malia Obama) just over two years ago. Meanwhile, the fate of the massive Trump Taj Mahal rests with union worker concessions. If talks collapse, that casino and resort could close next month.
2) Las Vegas
Vegas was among America's hardest hit cities during the Great Recession, with unemployment in the city approaching 15% in 2010. But gambling revenues on the Strip rebounded to $6.5B last year, not far behind 2007's all-time high of $6.8B. On the real estate front, Deutsche Bank's risky gamble on the splashy Cosmopolitan ended in May when the lender sold the property to Blackstone for $1.73B in cash, marking Blackstone's first significant investment in the casino trade. And while gambling has made a comeback, hotel titans like Steve Wynn are increasingly focused on their nightlife brands as club revenues rival those from the tables.
3) New York
The saga to expand gambling in New York beyond racetrack slots and Indian-owned casinos progressed last year when voters approved a measure allowing up to seven full-fledged casinos. The first four will appear upstate, but Governor Cuomo clearly wants the spread to reach NYC. However, it's unclear whether that ambition can survive the crushing failure of a bid to build a $4B convention center and casino at the Queens Aqueduct, where the Malaysian hospitality giant (and Cuomo adversary) Gentling Group now makes due with slot machines.
As the Chicago Tribune noted earlier this year, there's a Groundhog Day-like repetition to the gridlock over a proposed gambling expansion in the Illinois legislature. Various plans stretch back at least a decade and include a major casino in Chicago, roulette-centric gambling halls in the suburbs and--the biggest thorn in the side of gambling opponents--slot machines at racetracks. At the moment, politicians from the Windy City and beyond are in no rush to push forward legislation. After all, they receive an average $1M a year in donations from the gaming industry.
In January, Gentling unveiled dramatically reduced plans for the gambling portion of a resort development in a downtown building that formerly housed the Miami Herald. It also formed a new partnership with the Gulfstream racetrack that it contends would allow a Gulfstream permit to enable gambling at the project. But thorny legislative tussles over the geographic scope of that permit have stalled progress. Still, now that Gentling is only planning for 2,000 slots, in-fighting may subside.
Led by tribal powerhouses Foxwoods and Mohegan Sun, Connecticut is the country's fifth largest gambling hub based on the most recent revenue stats--the state reeled in $1.2B in 2012--released by the American Gaming Association. Still, recently released results showed year-to-year declines between 8% and 12%in the "handles," or total amount of money wagered, at the casinos as they continue to battle new regional competition arising thanks to eased legal limits.
After a a 2012 referendum paved the way for expanded legal gambling there, Maryland quickly got down to the business of competing with Delaware and West Virginia for high profile casinos. And a commission's decision to reward the state's sixth and final casino license to global player MGM Resorts International (The Bellagio, the MGM Grand) may have given Maryland the edge: the $925M complex will sit just 10 miles from Capitol Hill--and its deep pocketed lobbyists--when it opens in mid-2016.