Atlantic City’s casino industry has been in decline for close to a decade but gaming analysts believe that the impending sale of the Borgata Hotel Casino & Spa is a sign that things are about to improve in the city. Boyd Gaming announced in June that it planned to sell its fifty percent stake in the Borgata casino for $900 million to MGM Resorts International.
Michael J. Pollack, the managing director for casino research firm Spectrum Gaming Group believes that Atlantic City’s casino industry is finally turning around and the fact that MGM Resorts are willing to invest so heavily in an Atlantic City property could persuade other companies to also take a look at Atlantic City properties.
MGM Resorts, general counsel and executive vice president, John McManus backed up Pollack’s views by stating that the MGM Resorts recognized that Atlantic City’s casino industry was going through a difficult time due to the competition from neighboring states and the current economy but MGM believed that the city was going in the right direction and wanted to be a part of the solution to the city’s turnaround.
McManus stated that buying out the fifty percent from Boyd gaming was part of MGM Resorts overall plan and the company will focus on developing entertainment venues rather than more casinos on the land surrounding the Borgata casino. The Borgata Casino is the number one casino in terms of generating revenue in Atlantic City and once the sale is complete will be the eleventh asset of MGM Resorts.
The Borgata casino was estimated to be worth around $2.2 billion in 2013 but a tax court judge significantly reduced the casino’s value to just $880 million stating that the earlier estimation did not take into consideration the overall decline in Atlantic’ City’s economy. Based on its current value, the casino pays around $29 million each year in property taxes and will most likely continue to remit the same amount going forward. The New Jersey Casino Control Commission signed a number of leasing contracts last week which were related to the Boyd Gaming sale.
In a statement, Matthew B. Levinson, chairman and CEO of the Casino Control Commission said “MGM is committed to maintaining Borgata’s brand of excellence, and I will hold its leadership to its commitment to continued capital improvements of the property, to New Jersey in general and to the Atlantic City gaming market in particular.”
MGM Resorts has been steadily expanding its portfolio in the Northeast as the company plans to open its MGM National Harbor in Maryland before the end of 2016 and MGM Boston Harbor in Massachusetts in 2018. Some of the properties that the MGM group currently owns include the MGM Grand, The Mirage, Mandalay Bay and the Bellagio in Las Vegas and the MGM Macau in China.