The Revel Casino was conceived during Atlantic City’s “boom years” in the mid-2000’s, but by the time construction began in 2008 the economic landscape had changed, and the prudence of a project as grand as the Revel already started being called into question.
Since opening in April of 2012 the Revel has been an unmitigated disaster. The casino has yet to post a profitable quarter and has found itself in bankruptcy on two separate occasions, most recently in June of 2014.
If the Revel cannot find a buyer soon it’s expected to close this September, and will likely go down as one of the all-time casino blunders.
The Revel’s travails
The Revel has run into problems early and often.
The first hiccup came before the first shovelful of dirt had been lifted, when the project design was reconceived and scaled back.
In 2009, with construction underway, the Revel ran into funding issues which halted construction for nearly two years. Amid the financial crisis Morgan Stanley decided enough was enough and walked away from the project (Morgan Stanley owned 90% of the Revel at the time) forfeiting an already invested $932 million and leaving the Revel with an uncertain future.
In 2011 construction resumed on another down-sized Revel Casino, when Governor Chris Christie pledged $260 million to get the Revel built (for a 20% stake in the casino’s profits) and a billion-dollar loan was secured by the owners, Revel Entertainment Group.
On April 2, 2012 the Revel opened for business with a total price tag of $2.4 billion.
On February 19, 2013 (less than a year after opening) the Revel filed for Chapter 11 bankruptcy protection with over $1.5 billion in debts. On June 19, 2014 the Revel declared bankruptcy for a second time.
Bids for the casino are due by August 4, 2014, and if no suitable buyer is found the Revel is scheduled to close its doors barring some type of intervention from the state.
Is the Revel too big to fail?
So far the state of New Jersey has yet to recoup any of its $260 million investment, and is unlikely to do so for a very long time, as the Revel has hemorrhaged money since it opened (data from NJ DGE website):
- Q2 2012 Revel lost $35,177,000
- Q3 2012 Revel lost $36,838,000
- Q4 2012 Revel lost $38,894,000
- Q1 2013 Revel lost $40,779,000
- Q2 2013 Revel lost $81,671,000
- Q3 2013 Revel lost $23,513,000
- Q4 2013 Revel lost$22,200,000
- Q1 2014 Revel lost $21,750,000
If the Revel does close this year the state will not only lose its $260 million investment, but over 3,000 jobs, as the Revel is the third largest employer in the city.
This potential loss of jobs would also come on the heels of the 1,600 jobs lost following the closure of the Atlantic Club in January, and the scheduled closings in August and September of the Showboat Casino and Trump Plaza, which will see the city shed another 3,000 jobs between the two casinos.
If the Revel closes in September Atlantic City will have lost over 25% of its total jobs in the course of a nine-month period. Even with some of these positions migrating to competitors’ casinos the city’s unemployment rolls are likely to swell.
No casino is too big it fail, but with the amount of money New Jersey has invested in the property it almost appears that way. The Revel closing would be a tremendous blow for the state and lawmakers are frantically looking for a way to prevent that from happening.
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