The backers of Atlantic City’s nearly-broke Revel casino are making another risky bet.
The same group of investors that put roughly $1 billion in the casino’s parent company, Revel Entertainment, are loaning it another $150 million in a bid to keep the doors open through next summer, a source close to the situation said.
“This is an act of desperation,” the source said.
If they did not loan the money, Revel would have gone broke in a matter of weeks and their investment would have been worthless, the source added.
Now, they hope Revel can stay in business for a few more months, giving the backers time to restructure and ultimately sell the casino.
Revel — the first major Atlantic City casino to open in 10 years — has been a huge disappointment since it opened for business this spring.
“Marketing has been a big issue,” the source said. “They thought they would attract the New York cosmopolitan client, and really missed the meat-and-potatoes slot player.”
In contrast, the casinos at Aqueduct and Yonkers Raceway target slot players and combine to generate more than $1 billion in annual revenue.
Revel, which employs more than 2,000 full-time workers, lost $37 million in the third quarter on top of $35 million in the second quarter.
The casino’s first major backer, Morgan Stanley, stopped funding construction on the casino in 2011. The bank wrote down its investment by $1.2 billion before selling the stake — most of it to Canyon Partners and three other hedge funds.
Revel’s investors may be doubling down in the hopes that New Jersey Gov. Chris Christie will soon legalize online poker amid a nationwide move to allow Internet gambling. If he does, Revel could get a license to operate a website in-state.
“That, in itself, won’t save Revel,” the source said. “It’s a little nugget.”
The same group of investors that put roughly $1 billion in the casino’s parent company, Revel Entertainment, are loaning it another $150 million in a bid to keep the doors open through next summer, a source close to the situation said.
“This is an act of desperation,” the source said.
If they did not loan the money, Revel would have gone broke in a matter of weeks and their investment would have been worthless, the source added.
Now, they hope Revel can stay in business for a few more months, giving the backers time to restructure and ultimately sell the casino.
Revel — the first major Atlantic City casino to open in 10 years — has been a huge disappointment since it opened for business this spring.
“Marketing has been a big issue,” the source said. “They thought they would attract the New York cosmopolitan client, and really missed the meat-and-potatoes slot player.”
In contrast, the casinos at Aqueduct and Yonkers Raceway target slot players and combine to generate more than $1 billion in annual revenue.
Revel, which employs more than 2,000 full-time workers, lost $37 million in the third quarter on top of $35 million in the second quarter.
The casino’s first major backer, Morgan Stanley, stopped funding construction on the casino in 2011. The bank wrote down its investment by $1.2 billion before selling the stake — most of it to Canyon Partners and three other hedge funds.
Revel’s investors may be doubling down in the hopes that New Jersey Gov. Chris Christie will soon legalize online poker amid a nationwide move to allow Internet gambling. If he does, Revel could get a license to operate a website in-state.
“That, in itself, won’t save Revel,” the source said. “It’s a little nugget.”
