Investors' Service Warns of Impending Atlantic City Casino Closures
Investors putting money in Atlantic City can't say they were not warned. Those with some skin in Ocean Resort and Hard Rock Atlantic City have a good chance of seeing a return, but according to Moody's Investors Service, it will come at the cost of another casino's revenue.
None of the casino operators entering Atlantic City's gambling market do so with the intention of cannibalizing an existing casino, but they are all aware of the risk. Last month, Moody's warned of what they termed an “extreme scenario,” in which the new casinos lead to a new wave of casino closures in the city.
Other advisors, such as Andrew Zarnett of Deutsche Bank Securities, believe it is possible for the new casinos to grow the market. In the case of Hard Rock, which has proven their success at attracting guests in markets around the world, Zarnett could be right.
But the wave of new investments in the city could continue after Hard Rock and Ocean Resort open this summer. The owner of Atlantic City's Showboat hotel is reportedly considering reopening a casino.
New Jersey Gambling and tourism expert Rummy Pandit breaks down the situation facing existing casinos in Atlantic City using what he calls “the pizza analogy.” No matter how you slice the pizza, says Pandit, if the pie doesn't get bigger someone will be left hungry.
The new casinos have yet to open, and the competition has already begun. Both Ocean resort and Hard Rock plan to open on the same day, June 28.