Can Atlantic City Survive the Recession?

by Bodog Casino | Aug 27 2009

If Las Vegas is Coke or Pepsi, Atlantic City has always been RC Cola. That's not a dis, RC Cola is actually pretty good when you're thirsty, it's just not as good as the competition.

People who go to Atlantic City over Vegas either live close to the city or are looking to avoid all the extracurriculars that come with Sin City.

For that reason Atlantic City has always been a distant second in terms of revenue and size.

So you can imagine what it's going through if Vegas is being hit hard by the recession.
Revenue is down, way down, for the third year in a row. And several casino/resort projects have been postponed indefinitely.

Trump Entertainment is a good example of how things are going in New Jersey's Sin City. Three trump casinos have declared bankruptcy. Privately owned casinos like Tropicana Atlantic City are bankrupt as well.

Two other casinos have defaulted on their mortgages, and four casinos owned by Harrah's Entertainment has been borrowing money from lenders just to stay alive.

What's making things worse for Atlantic City is the expansion of gaming across the United States. More states are allowing casinos on Indian reserves and riverboats, which is killing the need for people to plan a trip to Jersey. Then you have the ease of the online gambling industry; why take 10 minutes to find a table when you can play with no waiting and no hassles instantly with the Bodog Casino.

The only good news? People with deep pockets are still making investments. Recently Donald Trump has made an effort to buy back his casinos, while other financiers and lenders are coming together to buy spots like the Tropicana.

Why are old rich guys putting up cash for a recession-strapped city? Well, recessions don't last forever, this is a classic example of buy low, and eventually sell high.

"The property needs time and money to get through this difficult economic cycle," said Stephen Yankauer, managing director of financial giant Credit Suisse, one of the lenders taking over the Resorts Atlantic City Casino.

While things look grim now, when the recession truly goes into recession there will be enough money going around for all the RC Cola casinos to survive.

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