The first rule of gambling is sometimes you win and sometimes you lose.
Not even Donald Trump was immune to that fundamental truth as he built a gambling empire. He helped Atlantic City develop its casino market into the nation’s second-largest while welcoming celebrity friends like Michael Jackson, smothering his casinos in neon purple carpeting and bringing his touch to decorating: If one chandelier is good, then 17 are better.
But the debt he incurred while doing so repeatedly led the casinos into bankruptcy — a problem that also beset most other Atlantic City casinos. And his efforts to expand the empire to other states did not go so well.
Trump, now a leading candidate for the Republican presidential nomination, saw potential in Atlantic City, where a real-life game of Monopoly was underway in the early 1980s. He bought up properties and started opening casinos at a rapid pace: Trump Plaza in 1984, Trump’s Castle, which would later become Trump Marina, in 1985, and the immodestly proclaimed “eighth wonder of the world,” the Trump Taj Mahal in 1990.
Profits increased at all three, including from $70.8 million in 1990 at the Taj Mahal to $103.2 million in 1991.
It only took the Taj Mahal a year to file for Chapter 11 bankruptcy. The next year, Trump Plaza and Trump Marina filed for bankruptcy as well. The relief was short-term.
In November 2004, Trump Hotels & Casino Resorts, which operated three casinos in Atlantic City and a riverboat casino in Gary, Indiana, filed for bankruptcy, suffocated by $1.8 billion in debt that rendered it too cash-poor to keep up with competitors.
It also was the beginning of the end of Trump’s control of his Atlantic City empire. As part of a pre-packaged bankruptcy reorganization, Trump agreed to turn over majority control to his bondholders while remaining the single largest individual stockholder of a company that emerged with a new name — Trump Entertainment Resorts — and half a billion dollars less debt.
But by 2009, the company was back in Chapter 11. That’s when Trump says he decided to leave Atlantic City. He told The Associated Press that he made lots of money in Atlantic City and got out at just the right time. But getting out was not solely his idea. Trump resigned as chairman of the board a day before the bankruptcy filing after bondholders and their allies on the board rebuffed his offer to take the company private.
Yet he retained a 10 percent ownership stake, largely for the use of his name. And during the bankruptcy, he put together a plan to buy the company back and take it private, using a slogan that may sound familiar: He told AP he would “make this company great again,” just as he says he’ll do for the country now. But when the smoke cleared, it was bondholders led by New York-based Avenue Capital Group and hedge fund titan Marc Lasry who emerged with the largest stake.
Trump told anyone who would listen that none of the casino bankruptcies involved his personal fortune. And it bears noting that the cause of the bankruptcies — taking on too much debt too quickly — was something many other Atlantic City casino operators also did, sending their own casinos into bankruptcy or onto the scrap heap.
Atlantic City has since fallen behind Pennsylvania in terms of the size of its casino market, and could drop more this year.
Trump Marina was sold in 2011. Trump Plaza closed in 2014, and Trump sued the company that still bore his name. He said it failed to live up to a contract mandating certain standards of quality, and was hurting his personal brand in doing so. He was particularly irked by rusty stains on the former Trump Plaza that still spelled out his name after neon letters were taken down. The company eventually painted over them, but refused to remove his name from the Taj Mahal.
The Taj Mahal is being taken over by fellow billionaire Carl Icahn from bankruptcy court, and Trump’s 10 percent ownership stake has become all but worthless. But the Chairman’s Tower, a 782-room, $255 million addition to the Taj Mahal, opened under Trump’s supervision in 2008, and may still help the casino survive under Icahn’s ownership.
A bid by a Trump-led consortium for one of two licenses to build casinos in Philadelphia was rejected in 2006 by state regulators who worried he might siphon off customers to New Jersey, where casinos are taxed at a lower rate.
And despite his insistence during a Republican presidential debate this fall that he never sought to open a casino in Florida, former Florida Gov. Jeb Bush, now a GOP presidential rival, says Trump did indeed seek the right to be able to open a casino in the state — something that never came to pass. Florida state officials say the same thing.
Trump Entertainment sold its Indiana riverboat casino in 2005 as part of its exit from bankruptcy.
Republished with permission of the Associated Press.