Atlantic City's $2.6 billion Revel Casino Hotel opened two years ago amid expectations it would transform the struggling Jersey Shore town, but it's closing its doors Sept. 10 after failing to find a qualified bidder for the property in a bankruptcy auction. However, some advocates, such as Atlantic City Mayor Don Guardian, aren't ready to write the resort's obituary quite yet.
In a press release, Guardian said the city was "disappointed" by Revel's decision "as there appeared to be several bidders for the property." He added: "This might be Revel's last chapter, but not the last one for this building."
Sharing Guardian's optimism is Dr. Israel Posner, who heads The Lloyd D. Levenson Institute of Gaming Hospitality & Tourism at New Jersey's Stockton State College. He told CBS MoneyWatch, "I don't think the fat lady has sung yet on this issue."
Posner said he wasn't aware of any investor or group of investors that might be interested in Revel. But just because Revel wasn't successful as a casino "doesn't mean it won't work for any purpose," he said. "There is nothing like it anywhere."
A spokeswoman for Revel declined to comment beyond a statement issued earlier today announcing the closure. Revel is one of three properties in Atlantic City now slated to shut because a casino glut in the Northeast has caused their customer bases to dry up. The statement, however, left open the possibility that Revel could continue as something other than a casino, saying the company would continue searching for a buyer interested in pursuing such a strategy.
"We hope that Revel can be a successful and vital component of Atlantic City under a proper ownership and reorganized expense structure," Revel's statement says, adding that it was offering no assurances that its efforts would be successful.
If Revel goes dark, more than 3,000 workers will lose their jobs, and it wouldn't be the only Atlantic City casino to go out of business this year. Showboat, which is owned by Caesar Entertainment (CZ), is due to close Aug. 31, followed by Trump Plaza on Sept. 16. Shares of Caesar's were crushed this afternoon, tumbling more than 8 percent.
Revel's history has been troubled from the start. Morgan Stanley (MS), one of the property's original investors, walked away from the project in 2010, taking a write-down of about $1.2 billion. The Wall Street bank sold its stake to Revel's developers. Republican New Jersey Gov. Chris Christie had arranged for Revel to get $260 million in tax credits to build the the resort. It has never been profitable.
Many casino industry observers faulted Revel for its business model, which placed more of an emphasis on luxury rather than gaming. The company decided to do without staples of other casinos, such as buffets, and it didn't court day-trippers who visit Atlantic City via bus.
"Everything about that business plan was wrong," said Alan Woinski, president of consulting firm Gaming USA Corp., in an interview. "Nothing made sense."
Revenues at Atlantic City casinos have plunged 45 percent between 2006 and last year, to $2.86 billion in 2013. It's a sure bet the declines will continue for the foreseeable future.