Could Steve Wynn buy the Atlantic Club to gain New Jersey foothold?
How odd would it be if Steve Wynn were to buy the Atlantic Club in Atlantic City in order to gain a foothold in New Jersey’s highly anticipated Internet gaming market?
It’s not like he’s unfamiliar with the building.
Wynn built the Boardwalk’s southernmost hotel-casino, which opened as the Golden Nugget Atlantic City in 1980, and he sold it for $440 million in 1987.
Since then, the property has had six different ownership groups and six different names. The parent company of online gaming giant PokerStars wanted to buy the aging 800-room property for $15 million. That deal fell apart in May.
This brings us back to Wynn, the chairman of Wynn Resorts Ltd.
A Wynn subsidiary quietly applied for one of New Jersey’s interactive licenses. The Press of Atlantic City found out about the paperwork, one of dozens of applications submitted by multiple companies.
A Division of Gaming Enforcement spokeswoman said Wynn’s petition for a “casino service license” is considered confidential. Wynn officials also declined comment.
So what is Wynn’s game plan?
One of the state’s requirements is that online gaming providers tie themselves with an operating Atlantic City resort. Ten of the market’s 12 casinos have announced an agreement with an interactive partner. The Atlantic Club has been silent, which makes the property as valuable as a royal flush.
Analysts believe New Jersey’s Internet gaming plan — which includes a full slate of casino games and Internet poker — will be far more lucrative than Nevada’s. The state has 9 million residents and is adjacent to New York City, Philadelphia and other East Coast population centers.
According to Reuters, analysts believe Nevada’s online gambling market will post $50 million to $250 million in annual revenue. New Jersey is predicted to generate $500 million to $1 billion yearly.
New Jersey is drafting regulations and processing applications. The state wants to launch its websites after Thanksgiving.
Wynn, meanwhile, still harbors feelings for the Atlantic Club, where fixtures, marble flooring and design work date to the building’s original construction.
Sources at the Atlantic Club told me in April that Wynn has often visited the property, once staying in his old suite for a football season “guys weekend.” After Superstorm Sandy threatened the Boardwalk in October 2012, forcing closure of the casinos, Wynn reportedly called a security officer to ask, “How did my building hold up?”
PokerStars re-emerged after the Atlantic Club deal fell apart to become the online gaming partner for Resorts Atlantic City.
Other legal European online gaming companies are grabbing a piece of Atlantic City’s business opportunities. Gibraltar-based 888 Holdings is Caesars Entertainment Corp.’s partner in the company’s four Atlantic City casinos. Gamesys Limited of Britain has signed on with the Tropicana Atlantic City.
Meanwhile, Trump Plaza has reportedly chosen Betfair, the British online gambling firm, while the Boyd Gaming Corp.-owned Borgata is partners with Bwin.party of Gibraltar.
Lately, stories have circulated that Ireland-based PaddyPower was eyeing the Atlantic Club. PaddyPower, which was found suitable last year in Nevada, announced in August it wants a New Jersey interactive license.
Credit Suisse gaming analyst Joel Simkins said casino operators are heavily focused on Atlantic City’s online gaming potential.
“There could be some initial fits-and-starts,” Simkins recently told investors. “How well New Jersey goes initially could serve as a potential catalyst or roadblock to other well-populated states following its path with online gaming.”
If New Jersey is as lucrative as some analysts say, Wynn won’t be sidelined.
The other Atlantic City hotel-casino reportedly seeking an Internet gaming partner is Revel. The stylish $2.4 billion hotel-casino opened in April 2012 and went through a bankruptcy reorganization a year later.
But if Wynn’s looking to buy, the Atlantic Club might offer a better return on investment. After years of struggle, the casino upgraded its marketing programs to attract locals and the property’s revenues have increased 14.7 percent through July.
Wynn has been focused on casino opportunities in Everett, Mass., and Philadelphia. He hasn’t shown interest in Internet gaming since March 2011.
At the time, Wynn Resorts signed a deal with PokerStars to work on securing passage of federal online gaming legislation. Two weeks later, PokerStars’ operators were named in the Black Friday indictments, and the company’s access to American gamblers was cut off. The deal was quickly severed.
Nor has Wynn applied for a Nevada interactive gaming license. It was thought his views on online gaming were closer with those of Las Vegas Sands Corp. Chairman Sheldon Adelson, who has called Internet gaming bad for the casino industry.
It wouldn’t be the first time Wynn’s position has changed.
He once told Adelson that casinos on Macau’s Cotai Strip were “a dumb idea.” He is currently spending $4 billion to build a resort there.
Howard Stutz’s Inside Gaming column appears Sundays. He can be reached at hstutz@reviewjournal.com or 702-477-3871. Follow @howardstutz on Twitter.