UPDATE: Christie’s Failed $260 Million Gamble

Last March, Chris Christie went all-in for the Revel casino in Atlantic City:

During a tour of the sparkling new building on the ocean’s edge, Gov. Chris Christie said the new Revel casino-hotel represents the key to the revitalization of long-struggling Atlantic City.

The governor said Tuesday the $2.4 billion Revel is one of the most spectacular resorts he’s ever seen and expects it will motivate other Atlantic City casinos to revitalize their properties.

“I think that one of the things that Revel will be is a catalyst for additional modernization and investment by the other casinos to say, listen, if we grow more people here coming to the region and we’re offering something that looks nice further down the boardwalk, maybe people will want to look there as well, ” Christie said.

The state provided $260 million in tax incentives to get the project completed.

For the last three years, we’ve heard over and over from Christie that we simply don’t have money for things like ARC and public employee health insurance and pension payments and schools and women’s health and…

But Revel was an “investment.” It would “create jobs” and “boost tax revenues” and “bring back AC.” How’s that working out?

Revel, Atlantic City’s newest oceanfront resort, has warned federal regulators about a potential bankruptcy or foreclosure, citing its growing debt load of more than $1.3 billion and the possibility that revenue will remain depressed as it has been all year.

Revel’s difficult financial situation today led the state’s top Democrat, Senate President Stephen Sweeney, to urge regulators to take a closer look at the casino’s finances. At the same time, Atlantic City officials warned they might have to take over the property if it doesn’t pay millions of dollars in overdue taxes.

The $2.6 billion casino and resort has struggled to become self-sufficient since opening in the spring because of a dearth of gamblers in what analysts say is an increasingly crowded East Coast market.

And what does Christie have to say about this now?

The state Economic Development Authority has approved a $261 million tax incentive package for Revel, though the resort must generate healthy earnings before it can cash in those tax credits. A spokesman for Gov. Chris Christie declined to comment today.

As of mid-September, Revel owed nearly $35 million to 22 contractors, according to a Star-Ledger review of lawsuits, liens and other filings. This week, a local union in Atlantic City, Unite Here Local 54, told Sweeney the number had grown to $51 million.

Revel didn’t open to rave reviews, and there’s little sign things will improve post-Sandy. I can’t help but think that $260 million would come in handy during the hard shore rebuilding ahead; it would have been nice to “invest” that money into shore attractions that people actually want to visit, as opposed to a resort that charges $7 for a bottle of water.

Everyone loves fleece-wearing Christie. But making smart investments in the state’s infrastructure and providing the right incentives to business is a far more complex task. Does the governor have the sound business judgment necessary to lead a successful post-Sandy reconstruction?

The Revel mess suggests we shouldn’t bet on it.

UPDATE: Uh-oh:

A hedge fund that manages $200 million in New Jersey public pension money also has a financial stake in Revel, Atlantic City’s newest and sleekest casino hotel, a Star-Ledger review of records from the state Division of Gaming Enforcement and Treasury Department shows. It’s a gamble that has put a share of public workers’ retirement income at risk if the struggling resort fails.

Swell.

h/t Marie Corfield in the comments

Comments (8)

  1. William Weber (WjcW)

    The state didn’t actually GIVE Revel any money, did they? Wasn’t the entire package tax abatements that would have not have been realized anyway?

    Reply
  2. Marie Corfield

    That a portion (albeit a small one) of New Jersey’s pension fund is invested in Revel? And that if it fails, that fund will be one of the last to be repaid? Personally, I’m not thrilled that a union pension fund is invested in a non-union entity. But this type of investment is more the norm than the exception these days as hedge funds invest in riskier companies to try to realize larger gains. http://www.nj.com/news/index.s

    Reply
  3. Senator Loretta Weinberg

    because it was too expensive for New Jerseyans, but we have a “brand new” casino hotel which might very well go bankrupt and will leave all those contractors with unpaid bills.  Sounds like a great New Jersey deal.

    Reply
  4. JackHarris
  5. Jersey Jazzman (Post author)

    Poh-tah-toh.

    Reply
  6. Jersey Jazzman (Post author)

    Just added it. Unbelievable.  

    Reply
  7. William Weber (WjcW)

    Revel didn’t open to rave reviews, and there’s little sign things will improve post-Sandy. I can’t help but think that $260 million would come in handy during the hard shore rebuilding ahead; it would have been nice to “invest” that money into shore attractions that people actually want to visit, as opposed to a resort that charges $7 for a bottle of water.

    Please visit some of my neighbors who have lost everything and suggest it to them…

    Have I got a deal for you… the government will not provide you with any grants/loans/etc to rebuild your property…

    But what we will do… is give you a 20 year tax abatement ONCE you rebuild… how about that? Because you know, money to rebuild now, and forgiven taxes later, they’re both potatos…

    And if you don’t rebuild, we wouldn’t have gotten those taxes anyway… so we don’t care.

    Reply
  8. Babs NJSD

    Small businesses take at hit? Thanks Christie!

    Reply

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