A slowdown brought on by the rapid proliferation of casino
gambling in the northeastern United States claimed its first victim in New
Jersey on Monday when a federal bankruptcy judge approved the sale and shutdown
of Atlantic City's Atlantic Club Casino Hotel.
The casino, which opened in 1980 as the Golden Nugget and
featured then-owner Steve Wynn bringing fresh towels to Frank Sinatra in its
commercials, will shut its doors Jan. 13.
Judge Gloria Burns approved a deal that was reached Friday.
Two rival casino companies with a presence in Atlantic City, Tropicana
Entertainment and Caesars Entertainment, will buy the casino for $23.4 million,
essentially strip it for parts and shut it down. The Tropicana will take the
slot machines and table games, while Caesars will get the 800-plus-room hotel.
Neither has any interest in operating the business in
Atlantic City's now diminished market. Atlantic City will have 11 casinos after
the shutdown.
Competition is a fact of life now for Atlantic City's casinos,
said David Rebuck, director of the New Jersey Division of Gaming Enforcement.
"We realize this is a difficult time for the employees
of Atlantic Club and all those who have been part of the history of their
operation," he said.
The Atlantic Club thus became the first Atlantic City casino
to close due to the downward spiral touched off seven years ago by the arrival
of casinos in neighboring Pennsylvania, which for the first time will now have
more casinos (12) than Atlantic City.
"Competition is nothing new for New Jersey and it will
be no different in 2014," Rebuck said.
The elimination of The Atlantic Club should make the market
stronger, said Matthew Levinson, chairman of the New Jersey Casino Control
Commission.
"No one likes to see a business close, but we are
optimistic that market consolidation will result in a stronger and healthier
hotel and casino industry in Atlantic City," he said.
The Atlantic Club is the first Atlantic City casino to close
since 2006 when the Sands was shuttered and blown up to make way for a casino
that was never built.
Atlantic Club workers packed the courtroom to watch the
judge deliver the coup de grace to the casino, where some have worked since the
doors opened 33 years ago. Joe Blatcher, a bartender for 30 years at the
casino, said he and other workers are particularly distressed that existing
Atlantic City casino companies joined together to eliminate a weaker rival.
"It's a matter of the entire city wanting to eliminate
a few properties so that the rest can still exist," he said. "It
seems very suspicious that two casinos can team up to take down another one.
It's like thinning out the herd to survive."
The judge said there was no evidence during the bankruptcy
court auction that any fraud or collusion occurred.
"The worst thing is they're doing it just to stop
competition," said a tearful Fran Critch, who has been a food server at
the casino for 29 years, and who now plans to sell her house because of the
grim prospects for other employment in the region.
"Who's going to hire a 59-year-old server?" she
asked.
The deal approved by the judge calls for each of the 650 or
so workers who are covered by a union contract who stand to lose their jobs to
get a $1,500 severance payment. They can keep what has accrued in their pension
plans, but no new contributions will be made.
Caesars has said it has no plans to operate the property as
a non-gambling hotel. A spokesman said it intends to distribute some of the
building's equipment among its four Atlantic City casinos — Caesars Atlantic
City, Bally's Atlantic City, Harrah's Resort Atlantic City and the Showboat
Casino Hotel — while considering what to do with the rest.
The judge also turned aside an objection by one of the
losing bidders, SoBe Holdings, run by a member of the Meruelo family. SoBe
submitted a higher bid of about $24.2 million for the casino and its gambling
equipment, but Atlantic Club officials and bankruptcy creditors preferred the
Tropicana and Caesars bids. Michael Sirota, a lawyer for the Atlantic Club,
said those parties were deemed more likely to be able to complete the purchase.
A lawyer for SoBe indicated the company would appeal the
judge's decision to approve the sale to Tropicana and Caesars. The Meruelo
family previously had tried to buy Trump Plaza Hotel and Casino but the deal
fell through earlier this year.
Source: ABC
News / AP
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