New casinos will open this year in Atlantic City after a winning 2017 for the Jersey Shore resort’s downsized gambling industry.
Hard Rock International announced a planned June 28 opening for its new casino at the former Trump Taj Mahal location, and Ocean Resort Casino is slated to open this summer at the former Revel site.
Atlantic City’s seven remaining casinos reported a collective 23.7% increase in their gross operating profit for 2017, according to the New Jersey Division of Gaming Enforcement, which Moody’s Investors Service analyst Douglas Goldmacher said is a “credit positive” for a financially distressed city that has been under state control since November 2016.
The gambling hub experienced five casino closures from 2014 to 2016 as regional completion intensified.
“The strong casino profits are significant for the city's recovery effort, because additional casinos are scheduled to open soon,” said Goldmacher in his report Wednesday. “Higher profit margins in the open casinos indicate an ability to withstand and thrive in competitive and difficult economic conditions.”
Hard Rock said in its April 17 announcement about the summer grand opening that it has already booked 400 entertainment acts for the new venue. The company is stressing an entertainment focus instead of a gambling-centered approach for the new property, with music and comedian acts planned on numerous weeknights.
"The grand opening of Hard Rock Hotel & Casino Atlantic City will set the tone for a new era of entertainment in Atlantic City,” Hard Rock chairman & chief executive Jim Allen said in a statement.
Atlantic City, which has about 40,000 residents, has around $400 million of outstanding debt, according to Moody’s, which rates the city at Caa3 with a positive outlook. S&P Global Ratings rates Atlantic City general obligation bonds two notches higher at CCC-plus.
Ocean Resort announced on April 2 it was partnering with Hyatt for a hotel that will feature a 138,000-square-foot casino, convention space, restaurants and five swimming pools. It expects to create 2,500 to 3,000 new jobs at the property of the shuttered Revel Casino Hotel, which filed for Chapter 11 bankruptcy in late 2014 just two and half years after opening.
Atlantic City could also soon see a rebirth of the shuttered Showboat casino, which has applied for a gambling license after recently reopening as a hotel. Goldmacher cautioned that one or more of the new casinos could cause a cannibalization and lead to further closures down the road. He said the financial impact of closures would hard to gauge because of complexities with the city’s payment in lieu of taxes system and the Investment Alternative Tax paid by casinos.
“The city's financial position would collapse without casinos, and without stability in the sector, it will be severely challenged to stabilize its operations,” said Goldmacher. “Both the city and the state have acknowledged the importance of economic diversification and are aiming for casino profits to have less of a profound and existential importance on the city's health. This outcome is very ambitious and remains at least several years away from becoming reality.”
