Moody’s predicts more AC casino closures with new Northeast openings
A Wall Street firm predicts a new wave of casino expansion in the Northeastern U.S. will lead to more casino closings in Atlantic City.
Moody's Investors Service said in a report Monday it expects the eight new casinos, altogether worth $5 billion, that will be opening in the region over the next three years will further stress business in Atlantic City, where four of the 12 gambling halls went out of business in 2014. The closings were due in large part to ever-increasing competition in the region.
Moody's did not predict how many will go belly-up, but said the Trump Taj Mahal, Caesars and Bally's "are already on the brink." Each is in Chapter 11 bankruptcy.
"As the number of casinos shrinks, some of the remaining casinos have seen revenues increase," Moody's wrote. "But we expect increased competition will keep the heat on incumbents, and that number of casinos in Atlantic City will likely continue to shrink. We expect more casino closures to occur in Atlantic City as some struggle to grow their business and face additional competition."
The Taj Mahal is transitioning from the company once owned by Republican presidential candidate Donald Trump to billionaire investor Carl Icahn. Its current owner, Trump Entertainment Resorts, is waiting for an appeals court ruling on whether it will have to restore health insurance and pension benefits it ended for workers in October 2014. Icahn has said if the ruling goes against the company, he will stop funding the Taj Mahal, causing it to close.
Caesars and Bally's are part of a unit of Caesars Entertainment, which is in Chapter 11 bankruptcy as well.
At least eight new casinos are expected to open by the end of 2018 in Maryland, Massachusetts, New York and Pennsylvania. Besides Atlantic City casinos, the report said, the new businesses will hurt existing gambling halls in Maryland, New York, Pennsylvania and Rhode Island.
The report noted that the MGM National Harbor casino, the first of the eight projects expected to be up and running, by fall 2016, will be located a little more than 10 miles south of Washington, where it stands to hurt Maryland Live! And in Pennsylvania, a second Philadelphia casino will affect Sugarhouse and Harrah's Philadelphia.
The Twin River casino in Rhode Island could see its revenue fall by 20 percent when a full-scale casino opens in southeastern Massachusetts. Also, the report said, four new casinos could be open in New York state by the end of 2018, with another new wave of openings in 2020 -- the first year New York City could be considered for new casinos.
Moody's said the new casinos could hurt seven of the nine racetrack casinos in New York state.
One silver lining: The new expansion will help gambling equipment manufacturers who will be furnishing as many as 20,000 new slot machines.
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