News Column

Revel Atlantic City Goes Bust

August 12, 2014

Suzette Parmley, The Philadelphia Inquirer

Revel Atlantic City (Dough4872, Creative Commons)
Revel Atlantic City (Dough4872, Creative Commons)

Aug. 12--The embattled and forever-troubled Revel Casino Hotel will close by Sept. 10, nearly 2 1/2 years after it opened, its ownership said Tuesday morning.

Some 3,200 employees will be out of work as a result of the closing.

Revel had been aiming for a bankruptcy auction, scheduled for last week. Instead, that auction had been delayed until Thursday.

It was reported on Monday that Revel did not receive a qualifying bid, a factor that almost surely led to the decision to close.

"We regret the impact this decision has on our Revel employees who have worked so hard to maximize the potential of the property," the ownership group, Revel Entertainment Group L.L.C., said in a statement

"Despite the effort to improve the financial performance of Revel, it has not proven to be enough to put the property on a stable financial footing," the statement said.

It said the group still hoped to sell the Revel "in some form, through the pending bankruptcy process," but added it "cannot avoid an orderly wind down of the business at this time."

The Revel, which cost $2.4 billion to build and had its construction halted during the worst of the recession, is the fourth Atlantic City casino to close or face closure this year.

Revel declared bankruptcy for a second time on June 19, after barely marking its second anniversary.

The casino performed severely under expectation on the revenue front and was never able to generate enough income to maintain its massive operations.

Gaming analysts said Revel failed to increase the gambling market in Atlantic City and instead cannibalized the existing market to the detriment of smaller, weaker performers. Of them, Trump Plaza is scheduled to close Sept. 18 and the Atlantic Club closed in January.

Although profitable, the Showboat also has announced it plans to close Aug 31.

Revel was built with the aid of $265 million in tax increment financing from the state and Gov. Christie declared the casino was "turning point for Atlantic City" shortly before it opened April 2, 2012.

But the casino never gained traction and never found a customer base.

Many said the expansive casino overreached and narrowly targeted an affluent clientele from New York that already belonged to the Borgata and had started going to recently opened gaming halls in New York.

Andrew Zarnett, a gaming analyst with Deutsche Bank AG, was one of the few industry experts who forewarned that Revel would feed off the existing Atlantic City gambling market instead of grow it.

"It should have never been built," he said in a recent interview. "Revel grew (gaming) supply while gambling revenue has been cut nearly in half since 2006."

Some experts said Revel suffered from not having its casino on the ground floor, prohibiting smoking when it first opened, not having a buffet and offering only expensive restaurants and never corrected them in time.


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Original headline: Revel Casino to shut by Sept. 10

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Source: (c)2014 The Philadelphia Inquirer

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