Showboat casino to close as Atlantic City market contraction continues

 This July 20, 2013 photo shows a slanted hotel tower of the Showboat Casino Hotel in Atlantic City. (Wayne Parry/AP Photo, file)

This July 20, 2013 photo shows a slanted hotel tower of the Showboat Casino Hotel in Atlantic City. (Wayne Parry/AP Photo, file)

The Showboat Atlantic City Hotel and Casino will be sailing off into the sunset at the end of August.

Caesars Entertainment announced plans to close the Showboat in August, resulting in layoffs of 2,500 employees.

“Atlantic City is undergoing a massive economic transition,” Atlantic City Mayor Don Guardian said Friday. “We know it is painful for those who are losing their casino jobs.”

While the mayor believes the city can reinvent itself as a multi-attraction destination, it’s been a long fall from Atlantic City’s glory days of 2007. Since that time, casino revenues have fallen steadily, a total of more than 40 percent.

Peggy Holloway, a vice president at Moody’s Investors Service, said the casino supply is adjusting to a world in which Atlantic City no longer has a monopoly on gaming in the region.

“It’s very clear that the market can’t withstand additional competition coming from Pennsylvania and New York,” she said. “And in the absence of a reduction in supply, the operators would just continue to cannibalize one another in a desperate attempt to get customers in the door.”

The Atlantic Club Casino Hotel closed in January and the latest addition to the boardwalk, Revel, is scheduled to go on the auction block on Aug. 6.

Showboat saw a drop-off of 76 percent of gross operating profit in the first quarter of 2014, Holloway said.

Caesars Entertainment CEO Gary Loveman said closing the Showboat had become necessary “to help stabilize our business […] and support the viability of our remaining operations in the vicinity.”

Caesars has three other properties in Atlantic City.

Srihari Rajagopalan, an analyst with UBS Financial Services, said the closing occurs as Caesars deals with the large amount of debt it took on just before the recession.

“They need to go through each property in their portfolio, figure out which assets need to be open, whether they are operationally feasible,” he said.

Bob McDevitt, president of the casino workers union, called closing the Showboat casino “a criminal act committed on the people of Atlantic City.”

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