Atlantic City casino Revel sold for pennies on the dollar

October 1, 2014, 10:54 PM UTC
People walk outside the Revel Casino Hotel in Atlantic City
People walk outside the Revel Casino Hotel in Atlantic City, New Jersey September 1, 2014. Four Atlantic City casinos are closing this year, but not all of their gamblers will return to visit eight others that have survived in the down-on-its-luck New Jersey resort. A third of Atlantic City's casinos have closed or soon plan to. The city's newest casino and arguably its biggest failure, the $2.4 billion Revel Casino Hotel, is in its second bankruptcy after opening in 2012. It is closing on Tuesday. The Showboat Casino Hotel (L, background), a Caesars Entertainment Corp property, was shut down on Sunday morning, and Trump Plaza Hotel (L background) and Casino is due to close in mid-September. Atlantic Club Casino Hotel was shuttered in January. REUTERS/Tom Mihalek (UNITED STATES - Tags: BUSINESS) - RTR44K1R
Photograph by Tom Mihalek — Reuters

Two years ago, Revel Casino opened in Atlantic City at a staggering cost of $2.4 billion. The price tag included two nightclubs, two concert halls, thirteen restaurants, and, of course, swimming pools galore. Its opulence was supposed to usher in a turnaround for Atlantic City’s fading fortunes. Instead, Revel sold in a bankruptcy auction on Wednesday to Brookfield Asset Management for just $110 million.

The casino’s fire sale is another ominous sign for Atlantic City, the gambling Mecca for the Northeastern corridor that has hit rough times. Since 2006, Atlantic City casino revenues have fallen by 45%, according to a 2014 report from the Center for Gaming Research, as competition rises from nearby states and from Las Vegas. Revel has declared bankruptcy twice following its opening.

It’s not the only Atlantic City casino to suffer. Earlier this year, Atlantic City had twelve casinos. Of those, four closed this year, the most recent being Trump Casino, which shut its doors in September. According to the Washington Post, another casino, Trump Taj Mahal, is expected to close its rooms later this month.

Brookfield, which also owns Hard Rock Hotel and Atlantis in the Bahamas, outbid Florida real-estate developer Glenn Straub for the property. Straub, who offered, $95.4 million plans to sue. He complained to the Wall Street Journal that Revel’s owners insisted he come up with a better offer by 6:00 a.m, which he was unable to do. A hearing has been scheduled for October 20. Brookfield declined to comment on the auction or impending case.

Andrew Willis, a company spokesman, declined to discuss any plans for Revel. Rather, he pointed to Brookfield’s success with past ventures including Atlantis in the Bahamas.

“We’re excited about owning the newest and highest quality asset in Atlantic City at an attractive valuation,” Willis said in an email.