The Atlantic City casino industry was in full crisis not too long ago. There was little reason for optimism after five of city’s 12 casinos closed their doors between 2014 and 2017.
As much as the closures were a brutal blow to the industry and the city, they may also have been a blessing. The remaining properties have by and large prospered in the contracted market.
But is the market right-sized? Some would argue seven casinos is the right number, or perhaps one too many. Others are confident the market can support one and possibly even two more casinos.
We’ll soon find out which group is right.
With two shuttered casinos slated to reopen under new names in the coming months (not to mention rumblings that Showboat is considering a casino reboot), Atlantic City is about to find out just how many casinos the market is capable of supporting.
Out with the old and in with the new
Ocean Resort Casino
Having resolved many of the financial issues that were an albatross around its neck, Ocean Resort Casino (the former Revel) could turn into a top destination in the market. Opened in 2012, Ocean Resort is by far the newest casino property in Atlantic City.
It’s also the most expensive, costing some $2.4 billion. Additionally, new ownership is planning on sinking about $150 million into remodeling and rehabbing Ocean Resort.
Hard Rock Atlantic City
On the flip side is the former Trump Taj Mahal. The Taj was the crown jewel of Atlantic City for many years. Its massive footprint and Vegas-style décor made it a top property. But like Revel, The Taj was constantly plagued by financial difficulties.
Not surprisingly, Hard Rock has spent $450 million rehabbing the large and rundown property. Hard Rock’s plan is to open a casino unrecognizable as its former self.
What casinos should be worried?
The new casinos are expected to grow the market, but they’ll also poach plenty of customers from other Atlantic City properties. That will put one or more of the city’s current casinos at risk of being the next casualty.
Located in the Marina, Borgata is the market leader and widely considered the best property in Atlantic City. No AC casino is on more stable footing than Borgata.
Also in the Marina, Harrah’s is the best of Caesars‘ three Atlantic City casinos. Caesars has been investing heavily in Harrah’s in recent years, including a huge convention space that sets Harrah’s apart from other AC properties.
Tropicana has gone from bankruptcy to one of the most profitable casinos in the market. That’s due in part to a number of major renovations and upgrades. The improvements will allow Tropicana to compete with the polish and shine of the new properties.
And even though it’s on the Boardwalk, Tropicana is located about two miles away from the two new casinos.
Like Borgata and Harrah’s, Golden Nugget is located in the Marina District. That should help insulate it, to some degree, from the two new Boardwalk properties.
With more of a boutique feel, Golden Nugget is unlikely to lose many of its core customers to one of the two new behemoth casinos.
When the two new casinos open, Caesars AC will be in one of the most interesting positions in the market. It’s a solid revenue generator, but given sister-property Harrah’s, it’s also somewhat of a redundant property for a company that is still struggling in a bull AC market.
As rtforty.com points out, Caesars properties haven’t been growing at the same rate as other AC casinos and are losing market share.
Caesars AC seems like the most vulnerable casino property in this category. That makes it a good candidate for a sale.
Right next door to the Hard Rock AC and just a half-mile from Ocean Resort Casino, Resorts will find itself in the unenviable position of being an older, smaller casino competing with newly rehabbed and larger properties.
Resorts is at the bottom of the pack in terms of revenue and only recently started turning profits. Add it all up, and Resorts is in a precarious position.
Bally’s is a bit further away from the new competition than Resorts. Yet the property hasn’t been as well maintained as Resorts and is Caesars’ third-wheel, red-headed stepchild, or whatever other phrase you prefer, in the market.
Further, it’s right next door to another, better Caesars property, Caesars Atlantic City. If one of them is going bye-bye, it will almost certainly be Bally’s.