Tropicana folds under recession strain
Tropicana Entertainment, owner of 13 casinos in Las Vegas and Atlantic City, as well as several smaller regional venues, has filed for bankruptcy.
The whole casino industry has been hit hard by the credit crunch, with less tourism, and visitors tightening their belts. Casino revenue is down almost 10% year on year.
The Tropicana’s troubles however are bigger than just the current economic climate. The company, originally called Wimar Tahoe Corp, bought the Atlantic City and Las Vegas Tropicana casinos and three others in early 2007, at the height of property prices. The real estate market went into freefall shortly after, making it unlikely that they would recoup the $2 billion spent on the purchase.
Due to poor management and breech of several state violations, the New Jersey gaming board revoked the casino’s licence and forced the company to sell. This forced sale will greatly devalue the property and the company is likely to lose out.
The slide into bankruptcy began when Tropicana missed an interest payment on a loan of $1.32 billion.
The casino company is some $3 billion in debt, however bosses say they will not be laying off any of their 11,000 employees. With a bit of financial help, the bankruptcy package will mean business as usual at the Tropicana.
