Carl Icahn Sells Taj Mahal To Hard Rock International

taj-mahalThe Trump Taj Mahal in Atlantic City, New Jersey, at one time, was a jewel in the crown of the east coast gambling mecca, but that eventually came to an end.

After prolonged construction and organizational problems, Donald Trump purchased the property and completed construction in 1990 at a total cost of nearly $1 billion, naming the new facility Trump Taj Mahal. With an unworkable, crushing debt burden, Trump took the casino into bankruptcy in 1991. The casino resort eventually became Atlantic City’s highest grossing casino, but by 2014 the Taj Mahal was struggling to operate above water. On September 10, 2014, Trump Entertainment Resorts filed for bankruptcy. It was at that point, billionaire investor and owner of the Tropicana Casino & Resort in Atlantic City, Carl Icahn, sensing a lucrative deal, stepped in and purchased the property. After battling with labor unions and local politics for two years, Icahn gave up. On March 2, 2017, Hard Rock International and other investors announced plans to purchase the property and convert it into the Hard Rock Hotel & Casino Atlantic City.

A statement released by the Icahn Enterprises group (IEP) confirmed the sale. It said, “We at IEP are extremely happy with our ownership of the Tropicana Casino & Resort. After considerable analysis and deliberation we determined that we only wanted to own one operating casino property in Atlantic City. A sale of the Taj Mahal therefore represents the optimal outcome for us. We wish Hard Rock and its partners the best of luck with the Taj Mahal.”

Almost as soon as Icahn had purchased the property, a war of words started between Icahn and New Jersey Senate President Steve Sweeny. Sweeny took exception to Icahn’s plans to refurbish and reopen the casino with a non-unionized work force. Icahn said, “Unfortunately, as far as I’m concerned, Sweeney has already done irrevocable damage to Atlantic City specifically and New Jersey in general. After his irresponsible actions, we determined that we would not invest the $100 million to $200 million of capital we believed the Taj Mahal needed and that we would instead sell the Taj Mahal at a loss (if possible). I believe other large investors will similarly have no interest in investing significant amounts in Atlantic City or New Jersey as long as Sweeney is in control of the Senate.”

Last year’s failed referendum to open North Jersey to the casino market, may have played a role in Hard Rock’s bid for an Atlantic City casino. Had the referendum passed, owners of Atlantic City casinos would have the right to first refusal to North Jersey casino projects. At the time of the vote in November, Hard Rock had a deal in place with Meadowlands Race Track to build a casino at the track.

Looking down the road, the North Jersey casino issue will come up again for a vote. If successful, it’s likely that Hard Rock, as an Atlantic City casino owner, will want to use their AC casino license as a springboard into the North Jersey Meadowlands. But it’s not just a new casino facility that Hard Rock is interested in. It’s also the possibility of launching a new online gambling site through the casino. Revenue from online gambling would be paramount to contributing to a new casino’s success. Last year, in 2016, online gambling made up 17 percent of AC’s Golden Nugget’s revenue and 15 percent of AC’s Resort’s revenue.

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