Why is Hard Rock Putting a Casino in Atlantic City?
Why is Hard Rock International putting in a $300 million boutique hotel in Atlantic City? Haven't they heard that it's dying and most casino bosses are eyeing Pennsylvania as the new gambling mecca of the mid-Atlantic? Perhaps they believe, like Carl Icahn who recently purchased the Tropicana Casino and Resort in Atlantic City, that they will be part of its renaissance.
"There will undoubtedly be tough sledding ahead for Atlantic City, especially in light of the increasing competition from neighboring states," Icahn said in a statement. "However, I believe that Atlantic City, with its beautiful beaches, can again become a premier destination resort."
But Delaware, New York and Pennsylvania already have slots and soon will all be having table games - the same as Atlantic City. By the way, Delaware and New York both have beaches.
Hard Rock and Icahn do have something in common, both bought when prices were low and are convinced they got a great deal. Hard Rock's proposed hotel is called "boutique" but could mean it will have not have less than 200 rooms and not more than a 30,000-square-foot casino. That's the new size that New Jersey State Senator Jim Whelan is proposing so developers have an easier time building new casinos in Atlantic City - and because $1 billion mega casinos aren't finding financing.
"We are intrigued by the newly proposed legislation, which makes entering the marketplace more manageable. Despite current headwinds, Atlantic City remains the country's second-largest gaming market and would be an exciting location for a Hard Rock Hotel and Casino," said Jim Allen, chairman of Hard Rock International.At GlobeSt.com, Whelan had this to say:The bill is the first proposed change to the hotel-room requirement of the 1977 Casino Control Act, which legalized gambling exclusively in Atlantic City.
"In this economic climate, finding developers willing and able to meet the 500-room threshold for a new casino is a very tall order. When you give developers the opportunity to invest in a smaller casino, and eventually expand when the economy rebounds, you're more likely to get greater interest in the city." Whelan also noted that this bill would allow developers to redevelop abandoned properties along the Atlantic City Boardwalk that were once intended for much larger casino resorts.Whelan says the smaller, boutique size will lead to more investment and Hard Rock seems to agree. Aside from needing less financing, it's also less of a gamble on Atlantic City, which may be heading on a "downward spiral," as Whelan called it.
While other developers criticized the bill as promoting "low-budget" projects, it's a reality check for Atlantic City. Smaller projects can usually find loans and will be finished, rather than sitting in construction mode for years because developers ran out of money, like the $2 billion Revel casino which is now $1 billion short of completion.
Hard Rock was able to purchase the 10 acres of land from a now-defunct, but once-proposed, multi-billion casino called The Gateway Project at a rumored bargain price. So it looks as if the Hard Rock is putting a casino hotel in Atlantic City because it's now much less of gamble.
Photo: tgraham