Rebounding NJ casino in line for 5-year license

ATLANTIC CITY, N.J. - November 10, 2010

The state Casino Control Commission granted the Tropicana Casino and Resort a new one-year license, noting the progress the facility has made over the past three years in recovering from self-inflicted wounds caused by its former owners.

"For the first time in many months, I actually sleep at night when I think of Tropicana," said Scott Butera, president and CEO of Tropicana Entertainment LLC. "I feel like we're finally there."

Linda Kassekert, chairwoman of the commission, also noted how far the casino has come in three years.

"It is amazing when I think of where we were and what we've been through," she said. "This has been a good process with a great outcome."

In 2007, the Tropicana was making news for all the wrong reasons.

Its owner laid off nearly 1,000 workers, leaving the casino and its hotel filthy and understaffed. The casino commission stripped the owner of its casino license and appointed a retired judge to run the place until a buyer could be found.

Now, under the ownership of billionaire Carl Icahn, the Tropicana is rebounding, with clean rooms, revenues that are keeping pace with the rest of the struggling gambling resort and an improved image.

"It's a lot better place to work than it was," said Bob McDevitt, president of Unite-HERE Local 54, the union that represents 15,000 casino hotel room cleaners, food and beverage servers and other service employees.

McDevitt had been the loudest critic of the Tropicana's former owners, Kentucky-based Columbia Sussex Corp. and hotel magnate William J. Yung III. McDevitt accused Yung of "strip-mining" one of Atlantic City's iconic casino properties through massive job cuts. Yung did not respond to a message seeking comment.

But the union leader says the casino-hotel has stabilized and improved since Dec. 2007, when the New Jersey Casino Control Commission stripped the Tropicana of its license and ordered that it be put up for sale. Icahn finalized his purchase in March for $200 million, a price that was 80 percent lower than what the Tropicana was expected to fetch before the recession hit.

"It's much cleaner than it used to be, and the appearance is much better," McDevitt said. "I have no doubt in my mind now that it's going to be successful."

This year, the Tropicana was the first of Atlantic City's 11 casinos to sign a union contract with dealers. Talks are dragging on through a third year at three others with no end in sight.

The 2007 license denial led to nearly two years of false starts and dead-ends in the effort to attract a buyer. When a deal to sell the Tropicana to Baltimore-based Cordish Company fell through, Icahn, who once owned the Sands Casino Hotel, stepped in as part of a drive to scoop up distressed casino properties at cut-rate prices.

In January, Icahn received regulatory approval to take control of nine Tropicana Entertainment LLC casinos in Nevada, Indiana, Louisiana and Mississippi as they emerged from a separate bankruptcy.

He also bought the unfinished Fontainebleau Las Vegas casino resort on the strip earlier this year.

Icahn did not respond to messages seeking comment Monday and Tuesday.

Before Wednesday's licensing vote, the Tropicana had been operating under interim authorization granted by the commission in March.

Financially, the Tropicana is struggling with the same pressures bedeviling all 11 Atlantic City casinos: the continuing poor economy and competition from new casinos in neighboring states including Pennsylvania, Delaware and New York.

Despite the slump, the Tropicana is holding its own and actually improving its market share a bit. Its Sept. 2010 revenues were $25.3 million, ranking it sixth in Atlantic City. In Sept. 2007, although revenues were higher, at $31.3 million, the Trop ranked seventh.

Butera said the parent company plans to invest money in Atlantic City on its casino floor, room and restaurant upgrades, and on new slot machines.

"You'll see us start to spend money and make the Tropicana into the great property I know it can be," he said.

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