New Jersey Gov. Chris Christie has proposed a slate of reforms to revitalize Atlantic City.
One idea is a state takeover of Atlantic City’s gaming and tourism district, removing the Boardwalk and adjoining areas from city stewardship. The gaming market has crumbled the past four years because of the recession and increased competition from neighboring states.
“Atlantic City is dying,” Christie said in one of the great understatements of his short tenure as governor.
Gaming revenues fell to $3.9 billion in 2009, the lowest levels since 1997. Atlantic City has lost 12,000 jobs.
The Republican called current and past Atlantic City elected leaders “corrupt and ineffective.” Christie believes the state can shore up the city’s existing 11 hotel-casinos. A revitalized Atlantic City could attract investment and improve visitation and convention business.
If Christie is serious about reforms, he might want to start with state gaming regulators. New Jersey’s Division of Gaming Enforcement chased MGM Resorts International from the market when it denied the suitability of the company’s Macau joint venture partner. It was the only gaming body in the country to rule in that manner.
MGM Resorts sold the land underneath Borgata for $73 million last week. The company needs to sell its 50 percent share of the resort. We may get an idea this week if Boyd Gaming Corp., which owns the other half, will pony up an estimated $500 million to acquire MGM’s stake.
Other development has dried up.
Pinnacle Entertainment killed plans for a 19.5 acre site on the Boardwalk and is selling the land, most likely at a 70 percent discount from its original $340 million acquisition cost.
Christie wants to salvage the $2.5 billion Revel project, which shut down construction in April after financing dried up and lead investor Morgan Stanley bailed.
Deutsche Bank gaming analyst Andrew Zarnett doesn’t think saving Revel is a good idea, especially for Borgata. The resort and the market will suffer when Philadelphia’s Sugar House Casino opens in the fall.
“On a long-term basis, we believe that (cash flow) at the Borgata will continue to trend down as the competitive landscape is expected to intensify,” Zarnett told investors. “Atlantic City revenues, especially Borgata, will plummet if Revel Casino is fully built.”
Some believe Christie’s efforts might be a little late.
“In the long run, (Christie’s plan) has got to help the market, but it won’t prevent the market from shrinking in the short run,” Moody’s Investors Service gaming analyst Peggy Holloway told the Asbury Park Press.
Howard Stutz’s Inside Gaming column appears Sundays. He can be reached at firstname.lastname@example.org or 702-477-3871. He blogs at lvrj.com/blogs/stutz.