New Jersey college sues Caesars over shuttered Showboat
A New Jersey college that bought the closed Showboat Atlantic City from Caesars Entertainment Corp. last year with plans to turn the shuttered casino into a college campus has sued the gaming company for $22 million in damages.
A 1988 deed restriction that prohibits the 26-acre Boardwalk site from being used as anything but a hotel-casino was not resolved by Caesars before the company placed its largest operating unit into a bankruptcy reorganization in January.
Stockton University spent $18 million to acquire the Showboat, which was closed in August. However, the university has picked up more than $500,000 in monthly costs.
Caesars sold the property with the caveat that the Showboat could not operate as a casino.
However, according to the Bergen Record, the university charged Caesars with breach of contract and fraud, saying the casino operator negligently concealed material facts.
The neighboring Trump Taj Mahal is seeking to enforce the 1988 covenant that restricts the building from being used for anything other than a casino. Trump Entertainment Resorts fears students under the legal age of 21 will sneak into the Taj Mahal to gamble and drink, which could lead to fines and regulatory discipline.
Stockton wants Caesars to honor an indemnification clause in the sales contract.
A spokesman for Caesars could not be reached for comment.
Caesars Entertainment operates three other Atlantic City casinos — Caesars, Bally’s and Harrah’s. Only Harrah’s is not part of the Chapter 11 bankruptcy filing for Caesars Entertainment Operating Co., that seeks to trim some $10 billion of debt from the business.
Caesars closed the Showboat because of the continued downturn in the Atlantic City gaming market.
Stockton has a subsequent agreement to sell the Showboat to a Florida developer who is buying the closed Revel.
The Showboat deal hasn’t closed. A spokesperson for Stockton told the newspaper the claim, filed in U.S. Bankruptcy court in Chicago, is a way for the college to preserve its rights.
Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871. Find @howardstutz on Twitter.
