Credit Crunch Hits Close To Home

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#1 Jan 25, 2009
CREDIT CRUNCH HITS CLOSE TO HOME, WHAT'S IN THE CARDS FOR A.C.'S CASINOS?
Phaedra Laird ( plaird@nbc40.net )

ATLANTIC CITY--Many are wondering what's in the cards for Atlantic City's casinos after revenues continue to steadily decline. It's just one problem several of the gaming halls are now facing in this economic meltdown.

"This the worst time of the year in good times." And now, in bad times, it's even worse for Atlantic City's gaming halls. "They're worse than they've ever been," said Frank Legato, editor at Casino Connection Magazine.

But many will tell you the economy hasn't been this bad in the 30 years the gaming halls have been up and running here. Besides gaming revenues steadily declining at all of the city's casinos, some are facing even bigger problems. "Companies like Resorts, like Trump, were caught with a large debt load, which should've been manageable, but turned out not to be and now they're starting to pay the price," said Legato.

The city's first casino, Resorts, could now be facing foreclosure, after defaulting on its mortgage for several months. Trump Entertainment Resorts could be forced to file bankruptcy for a third time if a deal is not reached with their bond holders to restructure more than a billion dollars in debt. "They have high debt load and they have trouble serving it when the cash flow's down," said Legato, "which is right now."

Meanwhile, after a year on the market, the Tropicana is still for sale. "The trustee wants to delay the sale once again," said Legato, "because they really only have the one bidder."

Despite all of the issues facing the city's gaming halls, there's a bright spot located along the boardwalk in a project that's still moving full-steam ahead. The credit crunch hasn't slowed down Revel Entertainment's $2 billion casino hotel project, which soars to new heights on a regular basis. "The activity has never ceased," said Legato, "it shows visitors and it shows us, in Atlantic City, that we are sound fundamentally, you know, for the long term."

Having secured their finances before the economic downturn, it's been enough to keep the project going. "We know they've got enough money to finish the casino, finish the first tower, and to get the resort open at least," said Legato, "and they're alone among operators in this city in that respect."

Plans for MGM's multi-billion dollar mega casino, the Curtis Bashaw/Wally Barr project, and Pinnacle Entertainment's project have been put on hold until things improve. But still, analysts say being on hold is much better than pulling out all together. "We just really have to tough it out until the general economy improves," said Legato.

Unfortunately, no one can predict when that will be.
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