Atlantic City's Ongoing Gambling Woes Get Worse

The Collapse of the City's Casino Market Continues as the Revel Becomes the Fourth to Close this Year

Revel Casino, Atlantic City, NJ

Barely more than a month ago I published a detailed piece on the Mid-Atlantic's lucrative casino market, and how new properties in Pennsylvania and Maryland were putting some serious pressure on the long-established hub market in Atlantic City, NJ. Well, it turns out that my ominous assessment of the situation in Atlantic City was astonishingly accurate (or even understated). In the short time since I published my post, three more casinos in Atlantic City have announced that they will close permanently by the end of the year. This is in addition to the closure of the Atlantic Club earlier in the year.

The most recent closing announcement is almost certainly the most tragic, but not all that surprising. Yesterday, the owner of Revel announced that the casino would close no later than Sept. 10 of this year. The fact that the casino (which was in its 2nd bankruptcy at the time of my June post) has only been open for hardly two years and cost around $2.4 billion to construct just makes its closure all the more shocking. It's hard to imagine a more colossal waste of investment.

In addition to the Revel, Showboat Casino (opened 1987) and Trump Plaza (opened 1984) will also be closing within a month. The Atlantic Club (opened 1980) was shuttered in January. Currently, these are the only closings planned, but it wouldn't be surprising if they aren't the last. Of course, it's extremely unlikely that all of the city's casinos will close, but to cope with the increasing demand the market will need to "right size" by lowering gaming/hotel room supply to match the lower demand at a new equilibrium. There's no telling how long that will take, especially since there are still casinos in Maryland and Pennsylvania, (and now New York) that have yet to open.