Atlantic City’s Trump Taj Mahal Closes Its Doors - Update in 2017

Beginning with the closure of the Atlantic Club in January 2014, Atlantic City has seen the fat trimmed from its casino industry. The city has gone from 12 casino properties to just seven, following today’s closure of the Trump Taj Mahal.

The closure of Trump Taj Mahal is hitting people differently than the other four casinos that closed over the course of 2014 — Atlantic Club, Showboat, Trump Plaza, and Revel — due to the iconic nature of “The Taj,” which will forever hold a place in gambling history.

The Taj becomes an icon

Despite its persistent financial troubles, The Taj was the gambling destination on the East Coast for over a decade.

Its place in the pantheon of gambling destinations shouldn’t be overly surprising considering it was the first billion-dollar casino on the East Coast, and the only billion-dollar casino in Atlantic City for over a decade. Borgata, opened over a decade later, and just barely eclipsed the cost of the Trump Taj Mahal, coming in at a final cost of $1.1 billion.

In effect, The Taj was a Las Vegas Strip casino in Atlantic City.

The Taj poker room was the place to play poker, with poker players traveling from New York, Philadelphia, D.C. and Boston to grab a seat in the weekend games at The Taj. As popular as the poker room was, it was the movie Rounders that made The Taj poker room as well known in poker circles as the World Series of Poker, and really cemented its place in poker history.

The Taj tries to shoot the moon

As mentioned above, the beauty and impressiveness of the property hid Trump Taj Mahal’s big secret.

The casino was a financial disaster from the day it opened its doors in 1990, with only brief periods of prosperity in its two-and-a-half-decade history.

The Taj’s financial woes didn’t come about because the casino wasn’t busy, or because it was seen as lacking in any respect. The problem wasn’t execution; it was planning. The price tag to build it, and the interest rates on the bonds Donald Trump agreed to pay in order to get the necessary financing for the casino simply set the property up to fail. The Taj was doomed before it ever dealt a card or rolled a dice.

As Politifact has reported:

“He [Donald Trump] funded the construction of the $1 billion Trump Taj Mahal casino in Atlantic City, N.J., which opened in 1990, primarily with junk bonds at a whopping 14 percent interest. A year later, the casino was nearly $3 billion in debt, while Trump had racked up nearly $900 million in personal liabilities.”

In 1991, Trump Taj Mahal filed for the first of what would eventually be four bankruptcies:

• The second bankruptcy occurred in 2004 (Trump Hotels and Casinos Resorts);
• The third in 2009 (Trump Entertainment Resorts);
• The fourth in 2014 (Trump Entertainment Resorts).

Trump’s personal interest in the casino was reduced from 47 percent to 27 percent following the 2004 bankruptcy, and to just 10 percent following the 2009 bankruptcy. His name remained on the side of the building but Donald Trump had been ousted as the chairman and lost control of operations following the 2009 bankruptcy.

Carl Icahn took control of the casino this year, and promised a $100 million investment in the property that many thought would breathe new life into the once opulent casino that had fallen into an extreme state of disrepair.

Icahn had recently turned around the Tropicana in Atlantic City, but a labor dispute resulted in a month-long strike, and with North Jersey casinos at least a possibility, Icahn decided to pull the plug and cut his losses.

Closure of the Taj Mahal may not be the end

Atlantic City’s capacity to support 12 casino properties was an open question well before neighboring states got into the casino business.

Once casinos started popping up on all sides of New Jersey, the question being asked wasn’t if Atlantic City could support 12 casino properties. Rather, it was “how many casinos need to close in order for Atlantic City’s casino industry to right-size itself?”

The current number of operational casinos in Atlantic City is seven. Developer Glenn Straub is trying to reopen Revel (which has been rebranded to TEN), which would bring the number of operational casinos in Atlantic City back up to eight. That may or may not be a viable number.

Some analysts think the market could support as many as eight casinos depending on other circumstances in the city and beyond. Others feel the proper number is no more than five or six casino properties, and even less if casinos are built in the northern part of the state in the coming years.

What happens next?

What happens to these shuttered casino properties will dictate the future of the once popular resort town.

Showboat has been green-lighted to reopen as a non-gaming hotel. If Trump Plaza, Atlantic Club, and Trump Taj Mahal can be repurposed in somewhat similar ways, it could be a boon for the city and its remaining casinos, all of which have seen operating profits rise since the 2014 casino contraction.

There are any number of uses for these massive properties:

They could be:

• converted to housing;
• turned into a non-gaming entertainment complex;
• turned into shopping malls with retail and dining options.
• The key is finding a way to repurpose these buildings so they’re not an eyesore on the Atlantic City skyline, or a depressing reminder of the city’s lost glory.

How Lottoland is making millions by cornering a new gambling market

One Tuesday around this time last year, businessman Luke Brill was riding the bus on his way to work with his earphones in, half-listening to Triple J, when he heard something that made him pay attention.

The station’s breakfast presenters were talking about the upcoming US Powerball jackpot — a multi-billion dollar lottery draw that was set to break records and become the biggest cash giveaway of all time.

What they didn’t mention, and what no one knew at the time, was that the draw would also lead to the launch of a massive business which in 12 months’ time would be on the way to revolutionising the gambling industry in Australia while raking in more than a million dollars a week.
That business is Lottoland, and Mr Brill is its managing director.

You’ve probably heard of the online lottery betting company by now — its branding is everywhere. The Gibraltar-owned business’s Australian arm has taken out advertising space across television networks in prime-time periods and secured significant sponsorship deals with major sporting events.
But a year ago, no one had heard of its gambling model, and for good reason — it didn’t exist.

Lottoland had been operating in Europe and the UK for three years but the timing of its launch in Australia was a bit of an accident.

“We got the licence to operate on Christmas Eve the year before and had planned on launching around February, but when I heard that this was going to be the largest jackpot in history, we spent the day rushing through things to get ready to launch, rushed out a press release and it just caught fire,” Mr Brill told news.com.au.

“We had no clients to begin with on the Tuesday. Zero. The Powerball draw was on the Thursday and by then we had 250,000 [clients]. It was the best possible start but it took us all by surprise and we weren’t really ready. We spent the rest of January playing catch-up and working out what our strategy was. It would usually happen the other way around.”

The brand didn’t invest in advertising at the time and it didn’t need to. More than a dozen TV and radio spots were devoted to explaining what Lottoland was all about — and there was a lot of explaining to do.

The business was unusual in the gaming and gambling industry operating in Australia at the time, and it still is. It involves betting on lottery outcomes rather than entering the lottery itself.

Players bet on the results of the biggest lotteries around the world, and now local draws too, and using an insurance-based model Lottoland is able to match the prize money offered in those jackpots.

So taking the US Powerball example, Australians weren’t able to buy a ticket for the $2.3 billion jackpot, but through Lottoland they could pay $10.50 to bet that the numbers they would have selected, had they been able to enter, would be picked. Just like buying multiple tickets, players could enter as many times as they liked, and the prize on offer was the same as that of the actual Powerball draw.

The Powerball jackpot sold itself, but without resulting in any major wins for Aussie entrants, it wasn’t great for Lottoland’s customer retention.

“That first 250,000 were almost like Melbourne Cup punters — most of them you’ll never see again” Mr Brill said.

“The initial push for us was ‘play the Powerball’, but that was just one hit, there wasn’t a great understanding of what our product was other than a way to get in on that one jackpot, so after that our advertising and marketing was about trying to educate our customers.”

Lottoland’s entry wasn’t welcomed by competitors who took legal action ahead of its launch which was settled out of court.

Gambling experts have also criticised it saying making lotteries more frequent increases users’ chances of developing a gambling problem.

Senator Nick Xenophon was among its most vocal critics. The anti-gambling politician blamed laws in the Northern Territory, where the company is registered, for allowing it to operate for profit unlike most other lotteries which are run by governments to pay for public services.

“Lottoland has turned into a legal no man’s land and we need to close the loophole,” he told news.com.au at the time of its launch.

“It’s also causing a haemorrhaging of local territories including state-owned ones. We will miss out on money for hospitals and schools because it will bleed government revenue.”

Lottoland says it’s trying to appease some of those critics by “looking for a charity to support”, but the main focus is building its customer-base.

Lottoland is now trying to get across the message that it’s not just US Powerball. It offers betting on other major international jackpots, and regular, local lottery draws as well.

But the main point of difference with existing lottery providers in Australia, as well as its offering of bigger prizes — “why play for a million dollars when you could play for a billion?” — is the online element.

“You can play on your mobile, there’s no real reason to go down to the newsagent. We know a lot of people don’t want to do that. Particularly young people — they don’t do that,” Mr Brill explained.

“People used to go to the bookies, to the TAB to have a bet, now they play on their Sportsbet or Ladbrokes app. The message we’re getting out is why are people going to the newsagent to buy their lottery ticket every week when they can play with us.”

Mr Brill says Lottoland is offering innovation in an area that has been stagnant.

“We are grabbing that younger audience,” Mr Brill said. He added that its customer bases skews towards women.

The company has signed up around 400,000 Australian users and by Mr Brill’s estimate has taken about one per cent share of Australia’s $2 billion lotteries market.

Though the company wouldn’t release its overall revenue for the year, Mr Brill said it was making “in excess of a million a week”.

Lottoland has paid out about $6 million in prizemoney to Australians since its launch, but is yet to declare a major win for one of its players and prove that it has the capacity to play it out.

“That would be the real prize for us,” Mr Brill said.

“We’re hoping for a big winner. Once we’ve paid out, say, $100 million, all those questions about is it legit, are people going to get paid out, they’re all answered.”

Pachinko operator ‘ripe fit’ for casino investors eyeing Japan

Now that Japan is a step closer to legalizing casinos, foreign investors may have already started forming links with their local counterparts in order to jointly bid for a Japanese casino license.

And one firm that is well-positioned for such kind of strategic investment is pachinko hall operator Dynam Japan Holdings Co Ltd., according to brokerage Union Gaming Securities Asia Ltd.

Pachinko operator ‘ripe fit’ for casino investors eyeing Japan: analystUnion Gaming Securities Asia analyst Grant Govertsen said the pachinko hall operator is “has significant unrealized value as it is ripe for strategic investment on the part of an international IR operator.”

“The company is well positioned for M&A opportunities as one of the largest and well-capitalized operators,” Govertsen said in a note. “[It also] has option value as a front-runner to win a small-scale regional IR license in Japan.”

Because its pachinko parlors are located in areas “that will not be in close proximity” to an integrated resort, Union Gaming believes Dynam will be “largely insulated from any negative impacts” of the IR development in the country. Only 6 percent of Dynam’s parlors are located in the prefectures that are being considered as potential candidates to host Japan’s first integrated resorts—namely Tokyo and Osaka. In comparison, Dynam’s rivals—Maruhan and GAIA—have 24 percent and 56 percent, respectively, of their parlors located in the same prefectures.

“Dynam has one of the largest data sets of gaming-related customers and customer behavior based on its nearly 50 years of operations and market-leading position in terms of number of parlors operated. Given our belief that Japan integrated resort revenues will be driven primarily by locals it would make sense for a potential integrated resort developer to make a strategic investment in Dynam,” Govertsen said.

Dynam disclosed in 2015 its plans to enter the “resort development business” in Japan. At the time, the company said it was looking at a land in Shimonoseki, the largest city of Yamaguchi prefecture, as its target site for development. Union Gaming forecast Dynam to be a frontrunner for a regional IR license, especially if such license is available in the Yamaguchi prefecture, where the company has “very strong ties.”

“We also note that Prime Minister Shinzo Abe is also a native of Yamaguchi, which could give the prefecture an advantage as it relates to becoming an IR host community,” the brokerage stated. “A native Japanese company that already has exposure to and knowledge of the gaming industry should have a distinct advantage in any regional small-scale IR RFP process.”

Why football bets are far more profitable to bookmakers than gambling machines

When the government completes its review of the gambling sector in the coming weeks, a clampdown on fixed odds betting terminals (FOBTs) looks to be on the cards. Dubbed the “crack cocaine of gambling” for allowing punters to bet stakes of up to £100 in games like roulette and poker, even former UK culture secretary Tessa Jowell has joined the chorus demanding curbs – despite overseeing their expansion in the 2000s.

With proposals to reduce maximum stakes to £2 and restrict the number of terminals, the industry is on tenterhooks. One of its defences is that FOBTs have a gross margin of between 2% and 3%, meaning between 97% and 98% of stakes end up being returned to punters in winnings. Which sounds reasonable until you reflect that the high maximum stakes and the speed at which people can bet means they can still run up large debts in a short space of time.

Nonetheless, FOBTs are serving as something of a lightning rod for other types of gambling that are also unfair to punters but poorly understood. I’m referring to bets where people bet not just on the outcome but on other aspects such as the scoreline, who scores first and combinations of outcomes. Supposing it were an Arsenal vs Burnley game, the bookmaker might be offering say 50-1 on Arsenal’s Alexis Sánchez to score first, any Burnley player to score second and Arsenal to win 4-1.

All these betting offers have exploded in recent years. You’ll see them all over the windows of high street bookmakers. It may not be quite as easy as with FOBTs to place lots of bets quickly, but online betting certainly makes it quick and there’s no maximum stake. There’s also no defence of a low gross margin. Do the maths and you find it can be as much as ten times higher.

How it works

Suppose in an upcoming international football match between England and Germany, a bookmaker offered odds of 3-1 on Germany to win. That bookmaker is implying that if the game were played four times, Germany would win once. The probability of Germany winning is 1/(3+1), or 0.25, or 25%. In theory the bookmaker is also implying a 0.75 (or 75%) chance of Germany either drawing or losing, since the probabilities of the various possible outcomes has to add up to 1.

I say “in theory” because the above imagines a situation where a benevolent bookmaker told you what they really thought was probable. In reality, bookmakers build in a profit margin by quoting odds that imply a sum of probabilities greater than 1. In other words, they say every outcome will happen slightly more than is possible – hence offering lower potential wins than they “should”. This allows them to make a risk-free profit from their customers’ wagers that is the same no matter which event actually happens. The higher the sum of probabilities, the higher a bookmaker’s profit margin.

For example one bookmaker offered odds on the Germany vs Argentina 2014 World Cup final that gave Germany a 0.44 probability of winning in 90 minutes, Argentina an 0.29 probability of winning and a 0.31 probability of a draw. These add up to 1.04, implying a gross profit margin of 0.04/(1+0.04) = 3.8% (see here for an explanation of how this maths works).

When I studied bookmakers’ odds across that tournament, I found the profit margins on different bets varied remarkably. The size of the profit margin was related to the number of possible outcomes in a given bet. Bets on which a team would win a match had the lowest profit margins – 4.5% on average. (Note this means even these plain vanilla bets have a higher profit margin than FOBTs.)

When it comes to betting on the scoreline of a game, Netherlands to win 2-0, say, there are many more possibilities than for the match outcome. The average gross margin on these bets was 21.9%. As for bets on which player would score the first goal, these have even more permutations – there are 20 outfield players, after all, or no one might score. The average margin on these bets was 32.3%. Meanwhile, aggregated bets that combine different outcomes like first scorer and who wins can also have much higher profit margins than bets on a single match’s outcome.

No surprise that when I looked at the bookmakers’ advertising, both on TV and in their shop windows, I found it almost entirely dominated by scoreline, first goalscorer and aggregated bets. These trends have continued; in work I will be publishing soon, I find that Premier League TV gambling advertising in January and February of last year was similarly geared toward bets with high bookmaker profit margins.

When Saturday comes RIP

There are also endless opportunities to get in on this action. Football betting was a low frequency affair when the majority of matches were on Saturday afternoons. Now high-profile matches take place almost every night of the week. To make it easier still, “in play” betting lets punters place bets during a match, with the option to “cash out” for a sure money amount before the result. Combine this with the high profit margins and modern football betting has become a high-risk gamble for the average customer.

There is therefore a strong argument that the UK government should do something about these bets as part of its reforms of betting. Gambling losses are running at record highs – £286 per adult per year in the UK and up by a third between 2010 and 2015. Your chance of beating the bookies really depends on whether you can restrict yourself to bets with a low average profit margin.

Capping the maximum margin is one option for the government – though FOBTs are proof you need to do more than that. The govermnment could also aim to educate and disclose, similar to what is done with alcohol. Or it could restrict or ban this type of advertising or even these types of bets altogether. At any rate, it is time for a debate. “The house always wins” is an old saying in gambling. These days, bookmakers are increasingly taking it to extremes.

Technical glitch leaves Singapore Pools punters frustrated

A technical glitch has paralyze the operations of state-owned lottery Singapore Pools, leaving frustrated local football punters at a loss on how to place their bets and collect their winnings for three days.

Daily newspaper Today reported that Singapore Pools staff from all 88 branches and four LiveWire betting venues in Singapore shooed away disappointed football bettors who wanted to place their bets on Sunday. They were informed that a technical glitch hit Singapore Pools’ sports betting services.

Technical glitch leaves Singapore Pools punters frustratedThe technical glitch also affected the disbursements of winnings. On the other hand, operations of Singapore Pools’ other betting services such as 4D, Toto and horseracing were unaffected.

According to a statement issued by Singapore Pools, the technical glitch was resolved last Tuesday. The company, however, failed to address the suspension of its betting services on Sunday. It also did not disclose the betting revenue losses it incurred due to the incident.

“The temporary service disruption was caused by a glitch that occurred during a routine system maintenance, and it has been fixed,” a company spokesman told the news agency in an email reply. “The service has resumed since 9am, Jan 10, 2017. Customers who have any enquiries can contact our Customer Service Line: 6786 6688.”

Singapore pools is the first operator to offer online betting services since Singapore’s Ministry of Home Affairs (MHA) declared that the firm and Singapore Turf Club race betting monopoly had been “found suitable” for exemption from the Remote Gambling Act (RGA) that was enacted in February 2015.

Singapore Pool, however, is still banned from offering casino-style games online such as poker and blackjack. The government also prohibits Singapore Pool from allowing persons under 21 to place their bets and it require all bettors to undergo identity verification at a physical outlet.

This is the first time Singapore Pools has experienced a glitch that suspended its sports betting services. Upset punters — many of whom missed out on dozens of football offerings on Sunday — hope it is the last.