The casino industry in Atlantic City has been in decline for nearly a decade, but game analysts believe the imminent sale of Borgata Hotel Casino & Spa is a sign of an improvement in the city’s situation. Boyd Gaming announced in June that it plans to sell a 50% stake in Borgata Casino to MGM Resorts International for $900 million.
Michael J. Pollock, executive director of Spectrum Gaming Group, a casino research firm, believes that the casino industry in Atlantic City is finally recovering and that MGM Resorts’ willingness to invest so much in Atlantic City properties will convince other companies to look at Atlantic City properties.
John McManus, general counsel and vice president of MGM Resorts, backed Pollock’s view by saying that MGM Resorts recognized that Atlantic City’s casino industry was going through a difficult time due to competition from neighboring states and the current economy, but MGM believed the city was heading in the right direction and wanted to be part of the solution for the city’s development.
McManus said buying 50% from Boyd gaming is part of the MGM resort’s overall plan and the company will focus on developing entertainment venues rather than creating more casinos on the land surrounding Borgata casinos. Borgata Casino is the No. 1 casino in terms of revenue generation in Atlantic City and will be MGM Resorts’ 11th asset once the sale is completed.
Borgata Casino was estimated to be worth about $2.2 billion, but a tax court judge said previous estimates did not take into account the overall economic downturn in Atlantic City, significantly lowering the casino’s value to just $880 million. At present value, casinos pay about $29 million in property taxes each year, and are likely to continue to transfer the same amount. The New Jersey Casino Control Board last week signed several leases related to the sale of Boyd Gaming.
Matthew B. Levinson, Chairman and CEO of the Casino Control Board, said in a statement, “MGM is committed to maintaining Borgata’s brand of excellence, and I will maintain its leadership in the property’s continued capital improvement, New Jersey general and in particular the Atlantic City gaming market.”
MGM Resorts has been steadily expanding its portfolio in the Northeast with plans to open MGM National Harbor in Maryland before the end of 2016 and MGM Boston Harbor in Massachusetts in 2018. Properties currently owned by MGM Group include MGM Grand in Las Vegas, The Mirage, Mandalay Bay and Bellagio, and MGM Macau in China.