How Tropicana’s License Woes Will Help Atlantic City
Yesterday the NJ Casino Control Commission denied the Tropicana’s Casino license renewal – a drastic and very abnormal action which had only been done once before in Atlantic City’s history. This does not mean much for the average Tropicana customer in the short term – it’s business as normal, as the casino is now being “run” by a Former Superior Court Judge appointed by the Casino Control Commission.
Immediately there is concern being raised as to what harm this will cause to Atlantic City’s gambling industry – if it will raise concern for potential developers and investors who are looking to expand or build in Atlantic City.
My opinion?
It will help Atlantic City because now the Casino Control Commission has demonstrated that it will take action if needed for an operation that is not run correctly. The Casino Control Commission is more concerned with the well being of the entire industry and will nip a problem before it becomes bigger – rather than just brush it off and hope it fixes itself.
At issue was the license renewal for the Tropicana Casino & Hotel. Every 5 years a casino has to go for a license renewal – most of the time its a pretty straight forward process, the casino control commission looks to ensure that the operation is running well – not necessarily profitable – but are customers happy? Are problems being taken care of? Is anything illegal occurring on the property or with the owners of the operation? Most casinos pass this without much of a peep from the media.
But the Tropicana’s license renewal has been almost front and center for the past month or so. Since the Tropicana was taken over by Columbia Sussex about a year ago through a merger, there have been widespread allegations and complaints from everyone from the overnight guest, day-tripper, to the employees themselves. Complaints about bedbugs, short staffing, unsanitary restrooms, job cuts which were not needed – but insisted upon by upper management to cut costs.. All allegations that severely hampered the casinos ability to offer a “first class operation” which is one of the most important requirements that the Casino Control Commission has to grant a Casino license. It’s odd that Columbia Sussex did not hire a management group to run the Tropicana like others have done in the past – Morgans Hotel Group for example owns the Hard Rock Casino in Las Vegas, but since it is their first casino property, the casino portion is being run by a management company which has plenty of prior casino experience. Why didn’t Columbia Sussex do something similar to that? Probably because they felt they could make more money and cut more costs by doing everything themselves.. Some good that got them.
The Tropicana is (currently) the only casino in Atlantic City that is independent – meaning it is not owned by major casino operator, or has only one location, and it was purchased by a company which is more accustomed to running hotel operations – not a casino business. It seems as though the Management of Columba Sussex had absolutely no idea how to run a casino – the management that was put in place to run the operation was frequently overrun by directives from above who told them to make the decisions the way they wanted, or be fired.
It’s obvious that the only loser in this fiasco is Columbia Sussex. Currently the Tropicana will have to be sold (its unclear how soon) and I’m sure the new owners will come in to clean up the operation and run it like the first class organization that it should be run as. In the mean time, the casino most likely will not experience a day of closure throughout this whole process.
This almost has the potential for another new casino to be developed in Atlantic City – sure the Tropicana is well known, and has alot of history to it, but it’s also a unique opportunity for someone who does not have a presence in Atlantic City yet (like Planet Hollywood) to come in and rebrand as the casino, or maybe Steve Wynn will come in to open his first casino in Atlantic City in 2 decades (although Wynn probably would prefer to start with a clean slate rather than convert an existing building). Only time will tell what will occur – but I think the end result will be a better casino for Atlantic City – either simply a better run Tropicana, or a completely new casino from top to bottom.
Columbia Sussex has to sell the property at a price of either what its worth yesterday (the day they lost their license) or what they purchased it for – which ever is less. It is unknown what the purchase price was since it was purchased in a package deal with a number of other casinos and properties for 2.8 billion.
What it comes down to is the stupidity on the part of Columbia Sussex, they purchased a great property which they mismanaged, and now they will have to pay the costs for that. I’m very glad that the Casino Control Commission took a hard line on them – it was suggested that they would be given a one year temporary renewal – because it gives more validity to the Control Commission, and shows that they are serious about the Casino Industry in Atlantic City – they will not allow just anyone to come in and run a casino.
That’s good news for the Atlantic City casino industry both present and in the future. The banks and investors of Columbia Sussex have no one to blame but the management, and I’m glad to see them being held liable for their mistakes instead of everything being brushed under the carpet and a warning to do better next time.
Related posts:
- Planet Hollywood Casinos Expanding to Atlantic City
- MGM Grand Atlantic City: Coming Soon
- Morgan Stanley Building a Ultra-Luxury Casino in Atlantic City
- Atlantic City Gets It’s First Boutique Hotel – The Chelsea!
Category: atlantic city, casino, commercial real estate, Hotels
Subscribe
If you enjoyed this article, subscribe to receive more just like it.
Read my