Big trouble at Resorts

Atlantic City’s oldest casino is in bad shape. From the AC Press:

Resorts is struggling for survival. Its owner is possibly facing the same fate as scores of recession-ravaged Americans who have defaulted on their mortgage – foreclosure.

In an unprecedented move, Resorts' chief lender is seeking New Jersey Casino Control Commission approval to take over the casino because it has failed to make payments on a $360 million mortgage for the past three months.

"I don't ever recall any financial source ever making this kind of request to us," commission spokesman Daniel Heneghan said.

The commission was well aware of Resorts' financial troubles before lender Column Financial Inc. filed its foreclosure request Thursday. The regulatory agency has been keeping an eye on the casino for months.

"We have been monitoring Resorts' financial situation for some time," Heneghan said. "We're getting more frequent reports from the casino about every aspect of their financial condition."

A key issue is whether Resorts is financially stable enough to continue holding a New Jersey gaming license. It must have enough cash on hand to fund the casino operations and pay off winning bets.

Dramatic downfall for Atlantic City’s oldest casino.

In retrospect, maybe Pinnacle’s did the Atlantic City market a favor by blowing up the Sands. That’s about $170 million in casino revenue that’s instead (hopefully) going to other properties. If these marginal casinos had even less market share, they’d probably be doing even worse.

That said, I don’t quite buy Dan Lee’s argument that Resorts is a lost cause. Caesars Palace is twelve years older, and is still one of the most successful casinos in the world. It’s grown, certainly, but I don’t think anyone would argue that it’s as easy to get around as Paris or the Luxor. So despite its issues, it’s still a solid performer. I think that the limitations of the physical plant can be overcome with better customer service and marketing. If you get treated better at Resorts than anywhere else in the city, will you really care that the windows are too small? It’s a historic building, which I think adds an intangible but still important value.

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