Revel's New Management Team Approved by NJ Regulators
This week news came that New Jersey gambling regulators have approved a new management team that is to take the helm of the embattled, and until recently, bankrupt, Revel Casino in Atlantic City.
Chatham Asset Management, a 22 percent shareholder in Revel, will now be responsible for its operation and has received preliminary authorization to be licensed by New Jersey’s Casino Control Commission.
Revel swapped debt for equity
Revel, which cost $2.4 billion to build and has been open for just a little more than a year, was in debt to its creditors by about $1.5 billion. Of the twelve casino properties located in Atlantic City, Revel is one of the worst-performing, with revenue that is too low to keep the casino afloat.
As part of its restructuring, it struck a deal with creditors to relieve itself of a large portion of its debt – which is now down to about $272 million – in exchange for equity in the struggling property.
Very quick turnaround on bankruptcy
It was because of that swap, which was pre-arranged with creditors, that Revel was able to exit from bankruptcy very quickly. Gaining profitability, however, is another story.
New Jersey Casino Control Commission Chairman Matthew Levinson expressed faith in Chatham’s ability to turn Revel around, saying, “They have taken over ownership of Revel at a challenging time as it tries to reposition and redefine itself in order to increase revenues and reach profitability.”
“Chatham is now in a position to help management to develop the steps it will take and chart the future course for Revel,” Levinson went on.
Hopes for profitability within one year
Last month when news broke that Revel had emerged from Chapter 11, its interim CEO said that the company hoped to be in the black sometime during the summer of 2014, however was not quick to elaborate.
Part of Revel’s plan to bring in more guests, and more revenue along with it, is to begin to allow smoking in the casino, something that has previously been forbidden. Revel also plans to lower prices in the hopes of attracting what they described as the “typical” Atlantic City gambler to the property.
For its part, Chatham says that it is confident that Revel will be able to meet its revenue goals.
“We continue to be very committed to the investment,” said Evan Ratner, who serves as portfolio manager for Chatham, a lending group based in the Garden State.
Revel not alone in troubles
Unfortunately for Atlantic City, and for the state of New Jersey as a whole, Revel is not the only casino in the city that is struggling financially. In fact, Atlantic City casino revenue has decreased every year for the last six years, owing in large part to gambling expansion in nearby states such as Delaware, Maryland, and Pennsylvania.
Gambling expansion and competition likely to continue
The trend of revenue traveling across state borders is likely to continue as many states along the eastern seaboard look to expand their gambling options, which was a concern of New Jersey lawmakers when they passed the state’s online gambling bill last winter.
That measure, signed into law in late February, will allow New Jersey residents to access a comprehensive variety of Internet wagering sites so long as they are within state borders when placing their bets. Industry insiders and gambling experts have predicted that online wagering will be a boon to the state’s economy, forecasting that the offering of online poker and other online casino games will attract a younger, more tech-savvy group of gamblers.
