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In a shocking turn of events, Tropicana Casinos & Resorts has lost its license to operate its namesake casino resort in Atlantic City. Though rumors have been swirling for several months the company might lose its operating rights in New Jersey, the rarity of the New Jersey Casino Control Commission has many industry insiders surprised at this major turn of events.
It’s only the second time in the near 30 year history of Atlantic City casino gambling a license has been pulled. Now the company must sell the property within 120 days due to its failure to meet operating requirements.
In a four to one vote, members of the New Jersey Casino Control Commission elected to pull the license. According to information provided to Hotel Interactive by the Commission, Tropicana Casinos & Resorts has a “lack of business ability, a lack of financial responsibility and a lack of good character, honesty and integrity.”
The problem started after a raft of complaints about how the property was operated. Specifically, customers complained the property was treated by its owners more like a no-star hotel than a multi-billion resort. Reports of bedbugs, roaches, broken and overflowing toilets have plagued the company since it started laying off staff when it took control of the property last January, New Jersey’s largest property with more than 2,000 guestrooms. In fact, the company has laid off 1,000 employees this year, about 25 percent of its staff level from last year.
"Numerous patron complaints from Tropicana Atlantic City's own files evidence the impact that the layoffs have had on the condition of the property and shown that there is true concern about Tropicana's ability to create and maintain a successful, efficient casino operation," said Yvonne G. Maher, acting director of the Division of Gaming Enforcement during last month’s licensing hearings.
CEO William J. Yung, III has repeatedly said the complaints were unwarranted and some of the cleanliness issues were an act of “sabotage.”
The New Jersey Casino Commission has disagreed however. In their decision the Commission said that since the company took control of the casino, regulatory compliance “has been abysmal.” Until the property is sold, it will operate under the stewardship of a trustee. In this case former New Jersey State Supreme Court Justice Gary Stein and will remain open during this transitional period.
“In some respects, this has been the most difficult of cases because the Commission has had to apply its institution regulatory expertise derived over the life of this agency to tell a long-time and otherwise apparently successful businessman that he lacks business ability,” said Commission chair Linda Kassekert.
“In other respects, the decision has not proven to be difficult at all, given the applicants’ demonstrated ineptness at appreciating the workings of the Atlantic City casino marketplace. The applicants could have taken the time to educate themselves in what it takes to operate successfully here, or they could have hired and retained sufficient staff knowledgeable in those processes. They have done neither, and must bear the consequence,” she added.
Kassekert also said that Yung “exhibited a lack of cooperation on a grand scale,” and that his “decision-making process was seriously flawed.”
For their part, Tropicana won’t simply put up the for sale sign without fight. The company plans to appeal the Commission’s determination through the New Jersey appellate court system. Tropicana representatives have also said they will “work collaboratively with the trustee to maximize value by facilitating a prompt and orderly sale of the Tropicana AC,” said a corporate news release.
Tropicana will use proceeds from the sale to repay its debt under its Senior Credit Facility. They are also looking into how it will affect their casino operations in other states. Most notably thy will examine their role in Nevada where the company operates the Tropicana Las Vegas, amongst others. They have been planning a massive redevelopment of that property, rebuilding it almost entirely to have about 10,000 rooms.
Already word is leaking out that bidders are lining up to bid on the lucrative property. Names emerging include Pinnacle Entertainment and Penn National Gaming.
Mark Giannantonio, President and COO of Tropicana Casino and Resort, Atlantic City has stressed the property will remain open during this transitional phase. “I can assure the Commission and the public that I, along with my Tropicana team in Atlantic City, will work closely and diligently with the appointed Trustee,” said Giannantonio. “I want the public to know that the Tropicana will remain fully open for business in Atlantic City. We have a very dedicated and hard-working staff here who will remain committed, as always, to provide our guests with a quality experience throughout their stay.”
William J. Yung, III, also owns Columbia Sussex Corporation with his family. Columbia Sussex is the largest licensee of full service Marriott Hotels in the U.S. The company and its affiliates own 75 hotels and 27,000 rooms across the United States, Canada and the Caribbean that operate under top brand names including Marriott, Hilton, Westin, Sheraton, Renaissance and Doubletree.
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