The encyclopedia · Strategy & Leadership · Strategic decision · 2012–2014
Revel cost $2.4B and closed 29 months after opening
Atlantic City's most expensive casino opened in April 2012, never turned a profit, filed bankruptcy twice, and shut its doors on 2 September 2014.
Revel · 2014-09
What happened
Revel rose on the Atlantic City boardwalk at a cost of $2.4 billion, the most expensive casino in the city's 36-year gambling history. Construction began before the Great Recession; the project ran out of money halfway through and had to scramble for roughly $1 billion more just to finish. It opened at sunrise on 2 April 2012, touted as the revival of Atlantic City's gambling industry.
The revival never came. Laden with debt, Revel ran a casino against every house rule of Atlantic City: the city's only total smoking ban, no buffet, no players' club, no daily bus trips, and premium room and food prices. The moves were later reversed, but not before the casino had sought bankruptcy protection twice in just over two years.
On 2 September 2014 Revel shut down — the second casino to close that Labor Day weekend after Showboat, with Trump Plaza set to follow weeks later. Atlantic City began 2014 with 12 casinos and lost a third of them by the end of September, with roughly 6,500 jobs projected to disappear across the city, as casinos in Pennsylvania, Maryland and Ohio split the drive-in market Revel's debt had been priced for.
Why it happened
- The capital structure decided the outcome on day one: $2.4 billion of cost needed revenue Atlantic City's shrinking market could not produce.
- The product alienated its core customer — no smoking, no buffet, no players' club — and every reversal came after the damage.
- The market moved while Revel was being built: Pennsylvania, Maryland and Ohio took the bus-trip gamblers the debt assumed.
The lesson
Revel opened $2.4B of debt into a shrinking market and banned the things its customers came for; it shut 29 months later — sunk cost is not a business model.
Aftermath
The tower was sold through bankruptcy court at a fraction of its cost and later reopened as Ocean Casino Resort. Revel remains Atlantic City's most expensive failure.
Sources
- CBS News, 2 September 2014 — $2.4B Revel casino shuts down after just 2 years (opened 2 April 2012 at sunrise; closed 2 September 2014; ran out of money halfway through construction and scrambled for ~$1 billion to finish; Atlantic City's only total smoking ban, no buffet, no players' club, no bus trips — all later reversed; second closure of Labor Day weekend after Showboat; Trump Plaza set to close 16 September; Atlantic City from 12 casinos to 8 by end of summer; saturated northeastern market)
- NPR, 2 September 2014 — After Just Two Years, Huge Atlantic City Casino Shuts Down (cost $2.4 billion; opened April 2012; never turned a profit; owners sought bankruptcy protection twice during operation; ~6,500 jobs projected lost across Atlantic City casinos by end of September 2014; four of 12 casinos closed or closing: Atlantic Club in January, Showboat 31 August, Revel 2 September, Trump Plaza 16 September; regional competition from Pennsylvania, Maryland and Ohio)
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