eastcoastgambler.net

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This version of East Coast Gambler will no longer be updated.

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Is losing 3 casinos good for me? for you?

There has been a slew of articles written this past week about the possibility of Atlantic City losing 3 casinos in the next few years.  Right now most of the casinos are under the gun due to the economy, size and age.  Trump has filed for chapter 11 bankuptcy protection, which may actually save it.  That’s besides the point.

“In our view, there is a distinct possibility that 1-3 casinos could be permanently closed in the next few years, particularly when many older locations are barely breaking even and, we believe, cannot be rehabbed to be economically viable,” analyst Joel H. Simkins, of Macquarie Securities, wrote in a new report summarizing Atlantic City’s plight.

This is obvious to me and not really a bad thing in my eyes.   This is what happens to businesses that don’t change, often or fast, enough.  Failure will force existing businesses to get back to core values that made them successful.  This should be good for the customer.  Israel Posner sees the future of Atlantic City very similar to the way I do.

Israel Posner, executive director of the Institute of Gaming Management for The Richard Stockton College of New Jersey, also said some casinos could be shut before the nation and Atlantic City recover from the economic crisis. Afterward, he thinks a new generation of megaresorts will rise in a post-recession building boom.

“Clearly, we are in for turbulent times,” Posner said. “We run the risk of losing a couple of properties. If we think long term, I think we’ll see fewer casinos before we see more. But I do think we’ll see more. If I had to use my crystal ball, I would say within the next five years there will be more.“

I’ve been saying that Atlantic City needs to reinvent itself and this recession may for the casinos to do so.  I’m very happy that a, so-called, expert sees things like I do.

So, is losing casinos good for me and good for you?  If things play out as I see them the answer is yes.

Here is one possible scenario. 

• Hilton goes bye bye in the next year and is not replaced.  It’s on an end of the boardwalk few people visit.  I’m not sure what will happen with Resorts.  The building is old and beautiful.  If I’m trying to move a town forward I blow it up as some kind of symbolic gesture.  I happen to love old architecture and have a hard time with that.
  
• Tropicana is saved and brought up to tomorrow’s standards.
• Harrah’s sells Showboat, which gets renovated.  Harrah’s may also sell Bally’s if they divest the brand.  If they don’t they renovate the Claridge tower to become an upscale vintage hotel.  Harrah’s would keep Caesars because of the brand and location.
  
• Revel is finished and beautiful.
• Pinnacle sells the land where Sands used to stand.  A new casino is built out to the boardwalk.
• Trump has already sold the Marina.  That leaves Taj and Plaza.  Taj will be saved by someone and possibly renovated since a new tower was just built.  I’m really not sure about the Plaza.
• If another casino is built I am guessing there will be another built at the marina.  Harrah’s was recently renovated, Borgata just added the Water Club and is renovating their regular rooms.  Margaritaville will be built soon.  This may become fertile area for another new hip spot.  It may also have too many new-ish properties.  I’m not sure.

This is all just a hypothetical scenario.  I welcome change as well as competition.  It’s one of the many reasons I love Las Vegas and I would love to love Atlantic City in a similar way.

Quotes in this article are taken from this article in the Press of Atlantic City.

Big Dawg Icahn To Buy Tropicana?

Billionaire investor Carl Icahn has thrown his hat into the ring to buy the state owned Tropicana.  Would this be good for Atlantic City?  Yes and no.

Billionaire financier Carl Icahn may be rolling the dice again on an Atlantic City casino.

The former owner of the now-defunct Sands Casino Hotel is among parties who may offer to buy the troubled Tropicana Casino and Resort once it’s offered in a bankruptcy auction.

First we have to look at some of Carl Icahn‘s recent investments and philosophy.  In short, Carl Icahn doesn’t necessarily go in to make a company better.  He invests to make money.  This can be seen in his investments in Yahoo, Lionsgate Films, Citigroup and others.  He has entered into partial ownership of these companies and none have shown much if any improvement in their performance – financially or otherwise.

With that being said, Carl Icahn is a very smart man who has made many investments that have paid him very well.  He will often enter business with a company and turn the table upside down and change leadership to other very smart people who are “experts” in their field.

Is Carl Icahn the best choice to own the Tropicana?

Maybe.  It is said that there are 10 others in the running for ownership of the casino.  The answers lie within who the others are.  It is possible that Icahn can get the Tropicana up and running with excellent service, revamped rooms and an overall good vibe and sell it for more.  Odds are that this will be his motive.

Let’s be clear that money is the motive of any businessman.  Icahn looks to get in and out of many deals quickly so he may be the person to provide immediate improvements.  He is not the only person that can do this, but he has a track record to show that he’s done this in the past and that he will continue to do it when he smells money.

There is a fertile landscape for someone to come into Atlantic City and challenge the Borgata in the young, hip, trendy market.  Tropicana already has some of that market with the shopping, dining and clubs.  The poor layout (restaurant & shopping in one area and gambling in another area) doesn’t help to convince people to gamble, but that can be overcome.

I’m looking forward to a move here later this year.