Revel announced that it will close its Atlantic City casino on September 10, 2014 as no suitable buyer was found through a bankruptcy auction process. The troubled resort has lost billions of dollars between construction costs and operating losses under several ownership structures.
Bad Timing and Luck
Revel’s bad luck started with its timing. Morgan Stanley acquired the land Revel is located on in April 2006. It announced the Revel partnership in October 2006. It broke ground in April 2007. This was all during the peak of the economic boom.
The bad luck continued after a tragic plane crash that killed three of its executives in July 2008. In August 2008, Revel announced that it would scale back the construction project by removing a second hotel tower as the economy started to tank.
Layoffs at the construction site started in 2009 and construction began to stall. In April 2010, Morgan Stanley backed out of the project as it watched Atlantic City’s gaming revenue collapse and puts its share up for sale. The construction site sat idle. A variety of incentives and a new investment by JP Morgan Chase later got the project rolling again.
Revel opened with the mentality that it was a resort with a casino. This is different than the other Atlantic City casinos where a majority of revenues come from gaming operations.
The economy was slowly recovering in the region when Revel held its grand opening. The target audience for Revel was the twenty-something professional that was interested in a weekend of fine dining and nightclubs. The recession created extremely high unemployment in this demographic. This created a challenge when marketing the casino.
This business plan included not allowing smoking anywhere within the casino, a first for Atlantic City and extremely rare anywhere else in the country where smoking in casinos is legal. Realizing its mistake, 25% of the casino floor later opened up to smokers.
The initial player rewards program was thought to be among one of the worst when it first launched. The cash returned to players was higher than normal, but the returns on the actual games made it worse than other Atlantic City casinos. Another issue is that rewards expired after 90 days. Most casinos allow players 6-15 months to spend points and comps.
Another problem with the player rewards program was that Revel refused to match tiers from other casinos when it first launched. This made it nearly impossible to draw gamblers that had built loyalty with other Atlantic City casinos.
Players that gave Revel action were disappointed in the comps issued. Many players complained in gambling forums that their action would get them exponentially better comps at other Atlantic City casinos. This turned off high rollers that make or break a casino.
Revel Loss Rebate
After Revel exited its first bankruptcy, what appeared to be a generous promotion was rolled out. Players were offered a loss rebate of up to $100,000 from video poker and slot play in July 2013. There was one term that was undesirable to players that lived outside Atlantic City. The rebate would be released in 20 equal payments of free slot play over 20 weeks after the promotion ended.
This was a term that forced players that took a shot and lost to hang around Atlantic City for the rest of 2013. Some players failed to read the terms and conditions of the promotion and were angered when told how it worked. These players claimed that the loss rebate promotion was falsely advertised.
Some players reported getting banned over their play. According to posters at the Wizard of Vegas forum, Revel kept a list of advantage players that would not qualify for the promotion. These players were allowed to lose thousands of dollars before being removed from the players club, effectively banning them from the promotion midway through their play.
No Interactive Gaming Partner
Revel never bothered to partner with any online gaming partner. This may have been due to the uncertain future of the property. A closure would create problems for its interactive partner.
Wrong Place, Wrong Time
There is no doubt that Revel is a magnificent resort. It is the newest in Atlantic City, the second tallest building in New Jersey and the second tallest casino tower in the U.S. The problem is that it was built in the wrong place at the wrong time. Its operational mistakes did not help overcome the other issues.
Revel will go down as one of the biggest construction mistakes in history when it closes its doors on September 10, 2014.