The Shutterings: New Jersey’s Atlantic Club Casino to Close January 13
The troubled Atlantic Club Casino Hotel in Atlantic city won’t be troubled much longer, after casino officials announced a sale of the property during recent bankruptcy proceedings that will see the casino permanently shut its doors on January 13th.
Following two days in which the property received no bids whatsoever, the bankruptcy auction’s overseers finally received a joint $23.4 million offer from two other New Jersey casino corporations, Caesars Entertainment Operating Co. and Tropicana Atlantic City Corp., which will immediately shutter the property.
Tropicana’s portion of the purchase, according to an abc.com report, will be $8.4 million, and will be for all the fixings on the casino floor: 1,640 slot machines and 48 table games. Caesars will get the property itself, with the hotel and its more than 800 guest rooms, at a cost of $15 million. Caesars has no plans to operate the property as a hotel and will instead recycle various non-gambling assets into its other four Atlantic City properties, while considering options and possible offers for the building and land itself.
The Atlantic Club’s closure reduces the number of New Jersey casino properties to 11, and is the first such since the Sands Atlantic City closed in 2006. Several Atlantic City casino properties have posted losses in recent years, amid increased gambling opportunities in other states.
The failure of the Atlantic Club comes after it reversed itself on an agreed-to offer for its purchase by PokerStars’ parent company, Rational Group, in 2012. That deal was for $15 million. PokerStars / Rational actually made installment payments totaling $11 million, in addition to a separate $4 million upgrade in a planned renovation of the property’s poker room, before the Atlantic Club and its owners, Colony Capital, backed out of the deal on a legal technicality and pocketed the $11 million in installment payments in the process.
The Stars deal was part of a plan by the Isle of Man-based site to reestablish a United States toehold in advance of the New Jersey’s ongoing push toward legalized online gaming, which became reality not long after. Atlantic Club officials even cited the advent of legalized online gaming in the state as one of the considerations for backing out of the Stars deal, figuring they could get a sweeter offer elsewhere. That never materialized.
Meanwhile, Stars moved over to a software deal with Resorts Casino Atlantic City, only to be left on the sideline in recent weeks when state gaming regulators rules that the Stars/Rational application for approval would be put into a suspended state for two years, indirectly urging the company’s founder Isai Scheinberg, to reconsider his previous stance of not cooperating with and reaching a deal with the US Department of Justice. Scheinberg technically remains a fugitive from the US legal system after having been indicted on 2011’s “Black Friday” of online poker.
As to why the Atlantic Club property itself would have sold so cheaply in the first place, that had to do with both the considerable losses posted by the property in recent years and a significant shorting of money that was supposed to go into a employee-pension fund maintained by the casino,which was legal but not particularly admirable. If you think that the Atlantic Club’s workers are getting the worst end of this deal, you’re likely correct: Crown Capital shorted the pension fund another $32 million, which now will probably be paid, while the company’s owners and executives walk away.
Of course, Atlantic Club execs lost no time in commending the roughly 2,000 employees who they shorted $32 million in compensation, in addition to taking a course of action that eventually put them out of work. Said Michael Frawley, the Atlantic Club’s CEO, in a company statement, “First and foremost I would like to express my profound admiration and respect for the employees of this company. The events of the last few months have evoked an array of emotions, and through it all, the employees of the Atlantic Club have remained consummate professionals. It is because of these outstanding individuals that we were able to build considerable momentum over the last year. Unfortunately our pace was unsustainable in the extremely challenging Atlantic City gaming market.”