Atlantic City Casinos Losing Players to Pennsylvania Casinos
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On a visit to Atlantic City on Tuesday, there were signs of a mass exodus by gamblers that once frequented this resort city for fun and relaxation, as well as the hope of gaining riches. It is no wonder that Donald Trump is trying to sell off his casino interests on the boardwalk.
Since Pennsylvania has allowed slot machine gambling this year, those living in and around the Philadelphia area have little or no need to take the journey to Atlantic City.
The Trump Plaza, Taj Mahal, and Showboat casinos had an obvious feeling of loneliness.
Wandering through the casinos, there seemed to be more available slot machines than ever before. For every one person playing, there seemed to be fifteen empty machines. Table games, generally at a premium, had one or two players and several empty or closed stations.
This was not just in one casino, but in many. The only casino that had a semblance of a busy business for machines was Resorts.
Bus rides from residents of New Jersey, New York, and Pennsylvania that ferried mostly senior citizens has declined in riders. Philadelphia area and western New Jersey residents find it a shorter commute to the Pennsylvania casinos.
The deal to sell the casinos, however, has run into problems for the Donald. Independent Wall Street analysts say the stock is now trading at $14; the company should fetch a price of about $11.
A source close to the bidders said, “What they want and what the other side is willing to pay for, are so far apart, it’s not looking too good.”
The New Jersey Casino Control Commission last week ruled that as a condition of Trumps licenses being renewed for five years, each casino must submit a monthly earnings report to the commission instead of a quarterly report. The commission’s report said that the company?s projections for the year were ‘overly optimistic’, when compared to what they had been generating this year, and had underestimated the impact of slots competition from Pennsylvania and New York, as well as new smoking restrictions in Atlantic City’s casinos.
Trump has asked for more than $2.2 billion for the Trump Taj Mahal, Trump Marina and Trump Plaza casinos, which included $1.5 billion in debt. That price tag values the company at more than $22 per share.
Bear Sterns Cos. Inc. in a June 5 analysis said the company has a “fair-value target of $11” per share, while other investment firms said that under ideal conditions the price could rise to as much as $17.
Morgan Stanley has $500 million invested in the Trump casinos for renovations as part of a bankruptcy restructuring and will have to sign off on any deal. Morgan Stanley is leading the sales talks on behalf of Trump as the largest group shareholder, and wants more that $17 per share.