Popular Atlantic Club Casino Files for Bankruptcy Protection
Published on 11/08/2013 -
By John Clark
Another Atlantic City casino is filing for bankruptcy this week, after years of declining revenues have taken a significant bite out of the region’s struggling casino industry, according to a report from ABC News.
Thanks to the filing this week of The Atlantic Club Casino Hotel, half of the 12 casinos in Atlantic City, New Jersey, have now filed for bankruptcy in the past six years, according to local sources.
Atlantic Club Casino Files for Bankruptcy
According to reports, Atlantic Club, which was formerly known as the Atlantic City Hilton, filed for Chapter 11 bankruptcy, which will allow it to stay in business as it goes through the bankruptcy process.
The casino’s new strategy of offering discount gambling, food, and entertainment to patrons with mid-level incomes has reportedly been working, but not fast enough, according to Michael Frawley, the casino’s chief operating officer.
Remarkably, roughly 70 percent of the games in the casino are penny slot machines, which offer relatively low rewards for gamblers, but are as cheap as possible.
According to Frawley, the company believes in this strategy, which it committed to 18 months ago. “Our creative branding campaign and the tremendous efforts of our employees have resulted in property growth within a continually challenged market.
Unfortunately, the market has taken longer to rebound than we had hoped,” said Frawley. But not everyone agrees with Frawley’s assessment.
In a petition filed with the bankruptcy court, Eric Matejevich, a leader of the casino’s parent company, said the company “does not have sufficient cash resources or committed financing to operate The Atlantic Club and service ordinary course obligations for an extended time period.”
Another Atlantic City Casino Seeks Bankruptcy Help
So the fate of the casino seems to rest on shaky ground, although casino promoters have been heartened by the potential sale of Atlantic Club to a bidder who would purchase the casino out of bankruptcy court.
Interestingly, the PokerStars website offered $15 million for the casino earlier this year, but the deal fell through. Sources do not expect the casino to receive such a large offer in bankruptcy court, and also speculate that the eventual closing price will be the lowest ever paid for a casino in Atlantic City.
Of course, the casino’s low value is no mystery. During the first nine months of 2013, the Atlantic Club reported a $7.3 million operating loss, which is a significant burden for a company with 1,660 employees. Fortunately, though, the company has not planned to fire any employees yet, according to Frawley.
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