The Revel Casino has been a demonstration in the worst possible outcome for casino investors since its opening. From its bankruptcy and closure to its long-term presence on the local real estate market, things haven’t gotten any better in recent months. In April, developer Glenn Straub made headlines when he purchased the property for about four cents on the dollar, but it’s brought him nothing but trouble since then. Although he seems to be taking each issue in stride, the fast-approaching winter is quickly presenting two more serious, potentially costly issues that must be addressed – heat and hot water.
It’s midway through November, but the Revel still has no contract in place with a local utility supplier to keep its pipes from freezing and bursting during the cold Atlantic City winter. Straub has submitted plans to city officials that outline the use of boilers for winter heat, but ACR Energy Partners, the utility provider with which he’s been butting heads for months, is attempting to block this plan, claiming that ACR owns the boiler equipment that’s currently inside of Revel. In a court filing, the utility criticizes Straub’s Polo North Country Club for waiting until “the eve of winter to concoct a temporary heating plan that both unequivocally uses ACR’s equipment without authorization and threatens the equipment.”
If that’s not bad enough, Bank of New York Mellon is also asking a judge to order Polo North to pay roughly $1 million in back electric bills to ACR. Both of these cases are set for federal hearings on November 24.
To date, Straub has invested over $100 million into Revel, and the results aren’t great so far. Since buying the three-year-old resort, which cost $2.4 billion to construct, out of bankruptcy court for $82 million, Straub has ran into problem after problem. In recent months, he’s considered reopening Revel in multiple incarnations – including an indoor water park, medical tourism resort, an equestrian facility and a problem-solving ‘genius academy’. Earlier this month, he even suggested using Revel to house Syrian refugees.
Problems started just two days after closing on the purchase, when ACR, the property’s sole utility supplier, disconnected service in the absence of a contract for future service. At that point, Atlantic City commenced issuing fines for lack of fire safety systems. Eventually, New Jersey ordered ACR to provide limited power for life safety systems and warning lights to prevent airplanes from flying into the 47-story building, but even paying for that service has been a headache. Straub agreed to place money in an escrow account to pay for the limited power, but the two parties have been in conflict over how much that emergency power should cost.
On top of these issues, Straub is currently engaged in separate legal battles over taxes, sewage fees and the presence of former business tenants. While he continues to take the issues in stride, there’s no doubt that Revel is becoming a nightmare for the investor. Whether or not the casino is ever reopened remains to be seen, but it appears that there’ll be a long, regulatory road to traverse before that even becomes an option.