ATLANTIC CITY, New Jersey — Just how bad have things gotten in the second-largest U.S. gambling market?
Wall Street giant Morgan Stanley decided it was better to take a $932 million loss on a casino-hotel it was developing in Atlantic City than spend the $1 billion it will take to finish Revel.
“We chose to dispose of our investment in Revel, resulting in a loss,” Morgan Stanley CEO James Gorman said during a conference call April 21 to discuss the company’s earnings.
Revel Entertainment, which is trying to secure the remaining financing for the project from China’s Export/Import bank, did not immediately respond to a request for comment on the Morgan Stanley loss on Thursday.
Morgan Stanley would have earned $2.33 billion excluding the charge. It put a dollar amount on the loss for the first time Wednesday and said it plans to sell Revel within a year.
“We’re in the early stage of that sale process, having just made the determination that it’s appropriate to sell,” said Ruth Porat, Morgan Stanley’s chief financial officer.
The company has spent $1.2 billion on the half-finished, glass-enclosed tower, which is considered too far along to tear down.
Revel ran out of money in January 2009, laid off 400 workers and stopped work on all but the exterior of the project until it could find money to do the inside.
The casino and its 2,000-room hotel are widely seen as crucial to Atlantic City’s efforts to compete with new slots parlors in neighboring states, which soon will offer table games that threaten to further erode New Jersey’s one-time monopoly on East Coast gambling.
Revel, begun in 2007 before the national recession hit and credit markets dried up, has been beset by problems, including the deaths of three key executives in a plane crash, a lack of funding to finish and a public backlash against a state tax break it is seeking worth as much as $350 million over 20 years.