Staff & wire reports | The credit crunch that is delaying some casino plans is nearing an end, even though it still may kill some poorly conceived projects, a panel of Wall Street experts said Tuesday.
Speaking at the East Coast Gaming Congress, officials with Wall Street firms said credit is still available, although at a higher price.
Joel Simkins, senior vice president of Macquarie Securities, was asked to compare the duration of the credit crisis to a baseball game.
"I’d say we’re in the bottom of the sixth," he said. "I think we’re nearing the end of the credit crisis. You have investors starting to come back and look at the sector, and you have vulture investors coming in to look at distressed properties.
"Deals are still getting done, and credit markets are opening back up," he said.
In Atlantic City, proposed projects by Pinnacle Entertainment and Revel Entertainment have been affected by credit markets; Pinnacle has said it may abandon its Atlantic City plans if credit markets don’t improve within a year or two.
Lawrence Klatzkin, managing director of Jefferies & Company, said he thinks both Pinnacle and Revel will ultimately build their Atlantic City projects. Revel CEO Kevin DeSanctis said his project is progressing on schedule for a 2010 opening.
"An obvious question is, does it still make sense to invest in this market," he said. "Of course."
New Jersey Gov. Jon Corzine, the former co-chairman of Goldman Sachs, also said a credit market turnaround is likely to happen soon.
"The distress in the credit markets, which happens to be the old business I dabbled in for 25 years, is real," Corzine said. "But that doesn’t mean that markets don’t self-correct."
John Maxwell, managing director of Merrill Lynch, said credit markets are open now, although at a more expensive price for borrowers. He said the tighter credit has made gambling companies look more closely at their plans.
"Maybe a new project in Atlantic City is not at the forefront of that," he said.
He also said it will be interesting to see what the Tropicana Casino and Resort sells for in Atlantic City. The property’s former owners were stripped of their casino license in December after less than a year of poor performance, but they’ve taken the matter to court to get the casino back.
Within the next five years, all three panelists predicted even more competition in the East Coast gambling market, including the possibility of casinos or slots parlors in Massachusetts, Maryland and Ohio.