What was once a thriving casino scene in Atlantic City a decade ago will be nearly halved come this October as another casino will officially shut its doors.
On Wednesday, the Trump Taj Mahal became the latest victim of the East Coast expansion of gaming. Although its owner, billionaire Carl Icahn, tried to invest in the property – including the reopening of its legendary poker room that had been featured in the film Rounders – to the tune of approximately $100 million, the problems for the casino city finally caught up with the Taj. A strike by casino workers over health insurance and other benefits added to the problems.
When it opened in 1990, the Trump Taj Mahal was the crown jewel of developer Donald Trump’s achievements. While gaming for the property was excellent (including being the highest grossing casino in Atlantic City prior to the opening of the Borgata in 2003), Trump’s mismanagement of his casino properties constantly had them in trouble, including the bailout of a loan payment owed by the junior Trump by his father Fred in December 1990 by purchasing casino chips worth $3.35 million (Trump would later be fined by the New Jersey Casino Control Commission for breaking regulations in this transaction).
Trump would give up leadership of his eponymous casino operations, the Taj Mahal and the Trump Plaza, with Icahn purchasing the bankruptcy-laden Taj property for $300 million only a couple of years ago. Icahn had visions of bringing the casino back into the black and a revitalized poker room was to be a part of that operation. After closing the poker room in late 2015, the operation was reopened in May with a lavish celebration and special promotions that apparently failed to bring back the old crowd.
It is a difficult time for the casino gaming scene in Atlantic City. When it was allowed in the mid-1970s, New Jersey was the only location on the East Coast of the United States that allowed for full-fledged casino gaming. Over the past 40 years, however, many other states – including Pennsylvania, New York, Massachusetts and Delaware, just to name a few – have opened their own casino operations, cutting into the market by the once dominant Atlantic City scene. In fact, the Atlantic City casino industry has seen nothing but declines since the mid-2000s, falling from an all-time high of $5.2 billion in revenues in 2006 to $2.7 billion in 2014.
Those revenue declines have significantly shifted the waters in New Jersey. Once the home of 12 different casino operations, with the loss of the Trump Taj Mahal there will only be seven of those left. Of these seven casinos, three of them (Bally’s, Harrah’s and Caesars) are owned by Caesars Entertainment; the Borgata is owned totally by MGM (who recently bought out Boyd Gaming), the Golden Nugget (formerly another Trump operation that went bankrupt, the Trump Marina), the Tropicana and Resorts have their own ownership.
With the decline in “brick and mortar” gaming, New Jersey gaming officials opened up the possibility of online gaming being a supplement to the casinos. When Governor Chris Christie signed regulations into effect in 2013 for a full online casino gaming industry, he opined that the revenues from the operation would eclipse the $1 billion mark (with state taxes around $240 million). Online casino gaming has been good for a couple of operations, but overall it hasn’t been the windfall that many thought it would be. In fact, the Trump operations dabbled quickly in the industry but were shuttered before they could get any conceivable operations going (the Trump Taj Mahal teamed with another defunct company, Ultimate Gaming, before the casino had its issues).
The closing is a tough pill to swallow for Icahn also. After investing north of $100 million into the property, Icahn was hoping to earn back his investments. The continued decline in Atlantic City – along with a ballot referendum this November that could open the rest of the Garden State to casino gaming – soured Icahn’s perspective. It was soured to the point that, if the referendum passed, Icahn threatened to close the Taj Mahal, ironically.
The casino industry continues to be a question in New Jersey. Can they find a way to ward off the competition and bring their product back? What is clear at this point is it will be done without the Trump Taj Mahal as a part of the mix.
The main reason for the closing was that the greedy unions hurt not helped their people. Times are changing, the days of free health care are gone and all sectors of the work force are contributing more and more. We are seniors and pay 500.00 a month for secondary. The are all crying now because they know they made a mistake and now are jobless. I do not feel sorry for this closing as it most likely make the remaining casinos stronger.