The Showboat Casino Hotel in New Jersey will close its doors on August 31, reducing the number of casinos on the Atlantic City boardwalk to 10.
The announcement came from owners Caesars Entertainment just one month after company executives had hinted that a closing may be imminent. Caesars currently operates four Atlantic City casinos and decided to give the axe to the gaming establishment with the poorest performance record. The other three are Bally’s, Harrah’s and Caesars Atlantic City.
Since 2006, revenue in Atlantic City has declined by more than $3 billion and competition in the city has increased,” said Caesars CEO Gary Loveman. “The dynamic in Atlantic City has led us to the difficult but necessary decision to close Showboat. While we regret the impact that this decision will have on our Showboat associates, we believe this is a necessary step to help stabilize our business in Atlantic City and support the viability of our remaining operations in the vicinity.”
That marks the second New Jersey casino closing in 2014 after the Atlantic Club locked its doors in January. Court proceedings late last year and a subsequent bankruptcy auction saw the Tropicana and Caesars submit a successful bid for the Atlantic Club, which has since been sold to a Florida real estate investment firm who will likely convert the former casino into residential housing.
Just a couple of days ago, the Revel Casino filed for bankruptcy and a shutdown is also looming unless a buyer with plans to turn the struggling business around emerges. The Revel is only two years old and ran into financial difficulties right off the bat as this is the second time in the casino’s short history that Revel lawyers will be making appearances before bankruptcy judges.
Some 2,100 workers are employed at the Showboat and Caesars executives told AP that every effort will be made to place at least some of them in positions elsewhere at Caesars locations. About 1,600 workers at the Atlantic Club were not afforded the same possibilities earler this year, with most landing in the unemployment line and seeking work without the assistance of a huge company such as Caesars. Should the Revel also fall victim to a shutdown, another 3,200 or so workers would also become statistics in the the state’s unemployment rate.
The culprit behind New Jersey’s struggling gaming industry are surrounding states who have opened casinos of their own, poaching the gamblers who had previously been visiting Atlantic City casinos. Pennsylvania is the neighbor most responsible for New Jersey’s decreasing revenue numbers, as the Keystone State is now home to 12 casinos and has taken over second place in land-based revenue among states throughout the U.S.
The situation may get worse before it gets better for New Jersey, as New York has also blueprinted a gaming expansion plan that may siphon even more Atlantic City customers in the future. The activity of nearby states is one of the reasons that prompted New Jersey officials to legalize online gambling last year. While revenue from igaming has offset some of the brick and mortar losses, it has not met initial projections.
Help may be on the way with regard to Internet gambling revenue in the form of PokerStars, who will likely soon be licensed to operate within the Garden State. The Amaya Gaming Group recently purchased parent company Rational Group for $4.9 billion and state gaming regulators are busy analyzing PokerStars’ suitability.
The Showboat recorded almost $2 million in operating profits for the first quarter of 2014. While that may sound like a healthy number to some, $8.5 million in profits were posted in the same quarter in 2013. Showboat ranks seventh in profitability among the state’s 11 casinos in 2014, but the numbers are 16% off of last year’s pace.
The soon-to-be closed Showboat Casino will operate as normal until Aug. 31.