Impact of MGM major in once-seedy Atlantic City

MGM Mirage’s $5 billion mega-casino will dwarf anything ever seen before in Atlantic City and will energize the formerly fallen city. One major reason for renewed development: the success of the Borgota.

“The move is part of an ongoing gamble by casino operators to polish Atlantic City’s image and attract upscale customers who want to do more than just bet money,” reported the AP

The project will be called MGM Grand Atlantic City. The cost of between $4 and $5 billion does not include the land value, the company said in a statement.

It will be built on a 72-acre site at Renaissance Pointe owned by MGM. It’s next to the Borgata Hotel Casino & Spa, which the company co-owns with Boyd Gaming Corp.

”We … hope to re-energize the city’s resort offerings and attract a new market of affluent East Coast customers,” said Terry Lanni, MGM’s chairman and CEO of the casino operator. He added:

“We believe the success at Borgata demonstrates the eagerness for further evolution of the nation’s second-largest gaming market.”

The resort will be the city’s tallest building and dominate the architectural skyline

Plans call for three hotel towers with more than 3,000 rooms, which would make it the largest such facility in the New Jersey resort town. If approved by city officials, it would also have the largest casino floor in the state, with 5,000 slot machines, 200 table games and a poker room, along with a 1,500-seat theater, restaurants and nightclubs, a spa, a convention center and 500,000 square feet of retail space.

The city’s 11 casinos in recent years have invested billions of dollars to attract more upscale visitors who are drawn by entertainment, dining and shopping options, ala Las Vegas.

”It’s…another step in Atlantic City’s evolution to a full-scale destination resort, which is critical given the competition we currently face,” said Joe Corbo, president of the Casino Association of New Jersey.

Atlantic City’s casinos are being hurt this year by slots parlors in Pennsylvania, Delaware and New York which are siphoning off gamblers that were once Atlantic City’s exclusive customers, reports the AP.

Compared with last year, Atlantic City’s gambling revenue fell 4% from the start of the year through August. It may mark the first annual revenue decline in the city’s 29-year history of gambling.

Ground breaking is expected next year, with an anticipated opening in 2012.

”It is a bet on what Atlantic City can become, not on what it is right now,” said Susquehanna Financial Group analyst Robert LaFleur. ”We are long-term believers that the market can transition from a predominantly day tripper market to more of a Las Vegas overnight destination.”

Meanwhile, Boyd Gaming Corporation completed its assessment of the damage caused by a fire last month at its $400 million Water Club development.

“Although we are disappointed by the delay caused by the fire, we currently remain on track to open The Water Club’s doors in time for the peak of the Atlantic City tourism season in 2008,” said Keith Smith, President and Chief Operating Officer of Boyd Gaming.

The hotel will have 800 rooms and 18,000 square feet of meeting space.

Report by David WIlkening