Atlantic City’s casino industry has been in decline for close to a decade now with revenues falling from $5.2 billion in 2006 to $2.56 billion in 2015. The slump in the casino market resulted in four out of the city’s twelve casinos shutting down in 2014. The Trump Taj Mahal was on the verge of shutting down until billionaire Carl Icahn decided to takeover and try and turn things around.
Fitch Ratings recently stated that if Atlantic City’s casino industry revenue dropped by another ten percent, two out of the eight remaining casinos could be forced to shutdown. Fitch identified the Trump Taj Mahal casino and Bally’s casino as being the two most likely to be impacted.
The Golden Nugget casino and the Resorts casino have recorded stronger performances and will only be at risk if the casino industry witnessed a market decline of more than ten percent. New Jersey legislators have proposed a bill to build two new casinos in North Jersey as they believe it will help to fight-off competition from casinos in neighboring states. Atlantic City casinos and legislators have not been in favor of this new bill as they believe the two new casinos could cause a major collapse of the city’s casino industry. The end result will be determined by New Jersey voters in November 2016.
Fitch Ratings believes that the opening of two new casinos in North Jersey will hurt overall revenue generated by casinos in Atlantic City. Should the bill be passed, it could take up to four years for the two new casinos to be opened. Carl Icahn has faced a number of challenges since he took control of the struggling Taj Mahal casino.
Apart from the possibility of having two new casinos open outside of Atlantic City, Icahn has also faced opposition from Local 54 unit which belongs to the Unite-HERE union. The union led by Bob McDevitt has been pushing for better benefits for Taj Mahal casino workers, a request that Icahn has denied on the basis that the casino did not have the funds to provide what the union was requesting for.
Icahn had threatened to withdraw his financial support from the Taj Mahal should the courts rule in favour of the Union. The Supreme Court recently made a decision in favor of Icahn who will continue to try and turn the Taj Mahal around.