The history of Revel Casino in Atlantic City can be summed up in one word: fiasco.
There may not be a bigger flop in the history of gaming than Revel Casino – and that’s saying something. Revel belongs on the dubious list inhabited by Euro Disney, John Carter, the Segway, LaserDisc, and New Coke.
Revel’s demise began before the first brick was laid, when the idea for a multi-billion dollar casino in Atlantic City was hatched.
The Revel at a glance
From the earliest planning stages to the casino’s construction to its short operational period, Revel has been mired in controversy, delays, and budget and operational problems.
The casino underwent several design modifications, and when original investor Morgan Stanley backed out, the property was left in limbo and eventually required a $600 million bailout from the state of New Jersey to complete the project.
When the dust settled, the Revel was finally completed (with one fewer tower than first proposed), at the bargain basement price of just $2.4 billion – yeah, billion with a b.
Even though the casino was being built during the financial crisis, the state thought it was getting a great deal, as its $600 million investment entitled it to 20% of Revel’s profits. And Revel was nothing if not a beautiful property (it had better be for $2.4 billion) with every state of the art amenity imaginable.
But when the casino finally opened its doors in 2011, it continued to run into problem after problem (most were self-inflicted), and the state’s 20% share of Revel profits amounted to $0.
In fact, in its three years of operation the casino never posted a profitable quarter. Even after a bankruptcy restructuring in 2013 (when the property was losing upwards of $80 million a quarter), Revel was still hemorrhaging over $20 million per quarter, and another bankruptcy was inevitable.
It wasn’t long before the state realized that if drastic changes weren’t made, their agreement with Revel wasn’t worth the paper it was printed on.
The Revel’s final demise
With the casino still losing $20+ million per quarter after its 2013 bankruptcy restructuring, it wasn’t long before Revel found itself in bankruptcy court once again (in the summer of 2014), but this time there was no restructuring. Revel was shuttered in September of 2014 and its assets sent to the bankruptcy court to be liquidated.
After a strange game of “I want to buy it, I don’t want to buy it,” Revel was eventually sold to Florida real estate developer Glenn Straub.
Straub acquired the casino for $82 million, and has talked about all sorts of potential plans for the property.
Although, if Straub ever wants to see the property turn a profit he will have to fix one looming issue with it – an almost insurmountable contract the casino has with its power supplier.
Why the Revel failed
The Revel was the right casino in the wrong locale.
Had the $2.4 billion monstrosity been built in Macau it may have succeeded, but a high-end destination casino in Atlantic City was a sucker’s bet. The casino marketed itself as high-end, with swanky restaurants and night clubs, even though high-rollers don’t frequent Atlantic City. This decision also kept locals from going into the property.
But the Revel had plenty of other failings as well:
Players want to puff
Revel opened its doors as a non-smoking property, something that is far from the norm in Atlantic City, and something that deters the high-rollers these types of destination casinos rely on to survive.
Zap to it
With energy costs skyrocketing, Revel decided to take a long-term approach to its consumption needs and built its own power plant next door to the property. The decision turned out to be folly.
Revel ran out of money for the power plant midway through construction and had to turn to outside investors to get the power plant completed.
When it was finally completed (over-budget of course) Revel found itself repaying its “angel” investors $1.5 million per month on top of the $1.25 million per month electricity bill it had to foot.
One of the biggest head scratchers was Revel’s design decision that allowed patrons to enter and exit the hotel without going through the casino. The bonehead idea of a casino without direct casino access from its hotel is something taught on the first day of remedial casino management.
An even stranger design decision was putting hotel registration up on the eleventh floor. It’s almost as if Revel didn’t want people to stay there.
So Revel Casino started with a terrible business model, shot itself in the foot by racking up $2.5 to $3 million monthly electric bills, and made the most basic errors in casino design.
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