Carl Icahn, one of the creditors of the now bankrupt long time money pit Atlantic City’s Trump Taj Mahal Casino Resort, is gambling that a judge today will agree to cancel the casino’s union contract.
It is hard to believe that a casino could actually lose money and go bankrupt. Aren’t they supposed to be gold mines?
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The problems for the Taj Mahal began with its inception. If you have ever been to Atlantic City then you have seen the gaudy, ostentatious structure that dominates the city’s row of casinos. But no one who ever goes to gamble in that city could care less about what the buildings look like on the outside.
Most of the billions spent on the Taj Mahal were, therefore, wasted.
Also, Atlantic City was never able to become the Las Vegas of the East Coast. This was mainly because of poor weather, new competition from Indian casinos on reservations throughout the northeast as well as the impoverished state of Atlantic City which make it a place that people really don’t want to go to.
Four of Atlantic City’s twelve casinos have already closed this year, including the Trump Plaza.
While Donald Trump’s name is still attached to the Taj Mahal, he gave it up a long time ago.
Icahn and his partners feel that the contract is part of the reason the casino is losing money, specifically the health and pension benefits that it guarantees the Taj Mahal’s workers.
Currently the holder of the hotel’s $286 million of debt, Icahn has stated that he would be willing to trade the debt for ownership of the Taj Mahal. He has even committed to pumping $100 million into it to on improvements.
Lawyers for the unionized employees are obviously opposed to the nullification of their contract. They told the judge that this is a case of the wealthy owners trying to save money at the expense of the lowest wage earners.
The Taj Mahal is also hoping to avoid closing its doors for good by applying for $175 million in relief from New Jersey’s PILOT Program and its Economic Redevelopment Grant and the Urban Revitalization Grant. But casinos are not eligible for assistance under these programs and so the state’s legislature would need to vote to approve any such move.