The conclusion of two casino sales in Atlantic City are indicative of the problems facing the gaming industry in the city.

A year-and-a-half journey toward new ownership ended last month for Atlantic City’s Tropicana Casino and Resort, when an investor group led by billionaire Carl Icahn was declared the winning bidder in the bankruptcy auction for the property.

Just as Icahn did with Sands Atlantic City, he got the Trop for a bargain-basement price—$200 million. (Icahn bought the Sands Atlantic City in 2000 for $65 million, selling it to Pinnacle Entertainment in 2006 for $270 million.)

Icahn’s group, which holds a $1.4 billion mortgage on the Tropicana, had submitted the $200 million amount as a credit bid against the mortgage. It was declared the so-called “stalking-horse” bid in the sale—a starting bid that is accepted if no higher bids come in.

None did. Retired Judge Gary Stein, who has been the property’s trustee since its former owner lost its license, had gotten permission to conduct the sale as a bankruptcy auction. After the deadline for competing bids passed on May 29, Stein declared Icahn’s group the winner. A bankruptcy court judge later approved the sale giving the
group the sprawling, 2,000-room property in exchange for forgiving $200 million in debt associated with the mortgage. It is anticipated the group will be granted a temporary license by regulators, pending the mandatory background and financial investigations.

Meanwhile, Trump Entertainment Resorts announced last month that it has terminated the agreement to sell its Trump Marina Hotel Casino to developer Coastal Marina LLC.

The announcement came after Coastal, which had planned to partner with entertainer Jimmy Buffett to transform the aging Marina district property into a “Margaritaville” tropical-themed resort, accused Trump Entertainment of breaching its contract agreement by engaging in what it called “fraudulent activity.”

The dispute between the partners came as a May 28 deadline expired to close the purchase agreement, originally signed in May 2008.

Trump Marina turned in the lowest gaming revenue of all Atlantic City casinos in 2008, at $203.6 million. Officials say the company will work to stabilize revenues while seeking a new buyer.

By GGB Staff

Staff writers for Global Gaming Business magazine. Las Vegas, Nevada.