What caused Trump casinos in Atlantic City to go bankrupt? Is it unusual for casinos to go bankrupt?
1 Ridiculous debt. Trump financed the casinos with junk bonds at high interest rates, that had a slim chance of being repaid even if the casinos were successful. I’m pretty sure he knew this, and so after taking his cut simply planned on running, leaving investors holding the bag. When I first got into gambling someone once told me, “Whenever you win, put some away, then gamble with the rest of the winnings, then stop. Gamble with the casino’s money, not your money”.
2 Overexposure. Atlantic City was already full of casinos. Trump wasn’t the first guy to dream about “the East Coast Las Vegas”. To add one more casino to the mix would be a significant risk. However, Trump at one point was running FOUR Atlantic City casinos. He thought that by having four of them, he might get four times the gamblers. Nope. He got the same number of gamblers, now spread across four casinos, at four times the price.
3 Per above, I believe Trump had approached this situation with his real estate thinking, believing that four properties might net four times the revenue, like tenants and rents. Haha, totally different animals. Gamblers aren’t signing leases, moving into casinos, and paying rent. There’s only so many gamblers, thankfully a small percentage of the population, who aren’t at all like the majority of people who might be looking for residential or office space.
4 Location. At that time in the 80’s, many of the high rolling gamblers were coming in from Asia. Trump knew this and had concierge offices with Chinese and Japanese speakers set up in his casinos. But AC was quite out of their way across the country, while most of them would be flying into LAX, where LV was only a short hop away.
5 Indian casinos. A few years after Trump had got his casinos running, the US Govt cut a deal with the Native American tribes of the nation, for them to open casinos on their land. Much of this land was in New England, near NYC and AC. This had a devastating effect on Trump’s and the rest of AC’s casinos.
6 Image. For some reason Trump has a well-known penchant for gaudy, ostentatious design. Lots of fake gold trim and opulent accents must surround everything of his. It very much seems to scream, “Look at me, I’m rich”. But like the old saying, money can’t buy taste. This was very off-putting to many, who’d rather stay and gamble at classier properties.
7 Terrible business relations. Trump was well-known for being a cheapskate, demanding the lowest bid on construction projects, who he’d then delay in paying, or not even paying at all. The result, his casinos were terribly built. Guests often complained of issues with their rooms, lights and plumbing not working, and leaks. Word got around and this affected business. Years later as seen here, the abandoned Trump Plaza then actually started crumbling, so was deemed a public safety hazard and ordered demolished. A fitting metaphor for Trump’s casino ventures, as well as most other things that are Trump in America. |
