Faced with prospect of the loss of 8,000 Atlantic City casino jobs, the leading union representing workers is planning on contacting potential buyers for the properties, which are losing money. A glut in gaming properties in the Northeast has sapped the traditional gambling markets that Jersey shore town has counted on for decades.
Trump Plaza recently became the latest Atlantic City casino to threaten closure. Trump Entertainment, the company founded by the real estate mogul, recently sent out layoff notices to about 1,600 workers at Trump Plaza, which first opened in 1984.
The notice under the WARN Act says Trump Entertainment Resorts was reviewing "alternatives" for the resort without specifying what those may be. It added that the company "expects" to shut down the hotel "shortly after September 16.
A Trump Entertainment spokesman declined to comment beyond the statement. Donald Trump hasn't had a management role in the company for years. He told the Philadelphia Inquirer recently he was sad that one of the casinos that bears his name may close, but predicted that more casinos would go out of business because the gaming market has become over-saturated.
Trump has a point. The Atlantic Club went out of business in January and two other casinos may close as well. Caesar's Entertainment recently announced that it is planning to shutter the Showboat on August 31, saying there were too many casinos competing to serve too few gamblers.
The Revel Casino & Hotel filed for Chapter 11 bankruptcy protection for the second time in two years in June. New Jersey officials invested $260 million in the glitzy casino, which cost about $2.6 billion to construct. Analysts quoted by the New York Times pegged the property's value at "substantially less than $300 million."
Atlantic City is paying a steep price for no longer being the only game in town. Casino revenue in the Jersey shore town peaked at $5.2 billion in 2006 and dropped to $2.86 billion last year. As many as 23 casinos within driving distance of Atlantic City were built during that time. Billionaire Paul Fireman recently announced plans for a 96-story casino in Jersey City near New York City.
"The competition is far greater than it was in 2005 or 2006," said Israel Posner, executive director of the Lloyd D. Levenson Institute of Gaming, Hospitality and Tourism at Stockton State College. "What you are seeing is a realignment of the market based on supply and demand."
Since the start of this year, about 25 percent of Atlantic City's casino jobs have been eliminated, including 1,600 when the Atlantic Club went out of business in January.
Speaking to the Philadelphia Inquirer, Trump predicted more casino closings in the Northeast. "Atlantic City is getting clobbered," Trump said. "Seventy-five percent of the casinos in Atlantic City are bankrupt or going through bankruptcy. The other 25 percent are on respirator. This is going to happen in [the Philadelphia area] and Pennsylvania, too, you watch."
The future may not be entirely bleak for Trump Plaza, one of the smallest casinos in Atlantic City with 906 hotel rooms. A chronic weak performer, it was sold earlier this year to a California company for $20 million. Though it may not be economically viable as a casino, a buyer may want to use it as a hotel given its proximity to Boardwalk Hall, the city's convention center that has played host to the Miss America pageant on and off for decades, according to Posner.
Even with their declining performance, Atlantic City's casinos pull in about as much revenue as the combined total of the neighboring resorts, according to Posner, adding that he didn't see any additional casinos being shuttered in "the foreseeable future."
It wasn't clear how far along the union had gotten with its strategy to find buyers for the casinos slated to close. An Associated Press story that reported that the contacts had been made is being corrected, according to a person familiar with the situation. Bob McDevitt, president of Local 54 of the Unite-HERE union, was in meetings and unable to be reached, according to his office.