By: Steve Larson
The Seminole Indian Tribe of Florida may be interested in entering the New Jersey gaming market. Through their Hard Rock franchise, the Seminole Tribe has made filings with state gaming regulators in New Jersey. This could indicate an interest in establishing a presence in the area once ago.
In the filing, Hard Rock asked officials in New Jersey whether the tribe would need to qualify for a license if they bought or built a casino in Atlantic City. Most observers believe the Seminoles are interested in acquiring the Revel Casino Hotel. Several sources have indicated the Revel’s owners are considering a sell of the property.
The Division of Gaming Enforcement ruled last year that the tribe itself would not need to obtain a license, though several executives with the Hard Rock company would need to do so. One of those execs was James Allen, the president and CEO of Hard Rock.
Among the filings were indications that the Hard Rock is seeking a statement of compliance. Such a statement is a preliminary step which helps determine who needs a casino license.
Revel Casino Bankruptcy
The Revel Casino Hotel is the newest gaming property in Atlantic City, yet it operated for less than a year before filing for Chapter 11 bankruptcy. The Revel Casino’s owners said they were pursuing “strategic options”. Such a term usually means a company is looking to either sale or file bankruptcy.
2011 Pilot Program Casino
Hard Rock has shown an interest in Atlantic City gaming ventures before. Back in November 2011, the Hard Rock was part of the pilot program for creating “boutique casinos”. The proposed new gaming venues would be set in hotels with less than 500 rooms and suites. The Seminole Tribe wanted to build a 208-room hotel with a rock and roll musuem. If plans had gone well, the $465 million hotel would have expanded to 850 rooms.
Because the Seminoles decided market conditions were bad at the time, they pulled out of the proposed development less than a year later. They had not reached the phase of breaking ground on the project.
2014 New Jersey Gambling Laws
Despite their tentative ventures in the past, the tribe appears interested in building or buying properties in New Jersey now. Their renewed interest may well be the result of the new legal online casino laws which allowed for iGaming in New Jersey. The possibility New Jersey might one day have sports gambling also could be an enticement.
That may not be the most important part of the financial picture, though. Tribal officials might be looking the distressed Revel Casino as a bargain property. The Revel Casino cost $2.4 billion to construct. Now that the casino is in a distressed financial condition and its owners face bankruptcy, the property could sell for significantly less than $2.4 billion. One story had the Revel Casino selling for less than the half-billion the Seminoles were prepared to spend back in 2011.
If so, they could be seen as buying low and collecting a major asset while doing so. Owning the Revel Casino would provide a gambling license for New Jersey, meaning they would qualify for the expanded gaming culture of Atlantic City. If New Jersey joined a proposed new interstate iPoker association, the Revel Casino’s owners would stand to gain. If iCasinos proved to be more lucrative than imagined, the Seminoles would stand to gain. The same could be said if land-based sports gambling were instituted. Though some or all of these might be long shots according to the experts, getting into the market at a reduced cost would allow the Hard Rock to take the risk.
When it’s time for the Revel Casino to be sold, the Hard Rock will face stiff competition. Several big name gaming companies are interested in adding the property. Though Caesars Entertainment Company has a huge debt crisis looming, several reports have Caesars interested in adding the Revel to their list of Atlantic City properties. It would be the fifth such property owned by Caesars, something which has drawn criticism from a handful of New Jersey politicians.
Numerous financial experts have expressed concern that Caesars Entertainment is carrying too much debt (between $20 to $30 billion). Several New Jersey politicians have expressed concern that Caesars would own 5 of the 11 casinos on the Boardwalk, perhaps hurting competition. Still others might be concerned about allowing a company with possible bankruptcy issues to increase its stake in Atlantic City, so several reasons exist which might give the Hard Rock the edge over Caesars Entertainment.