Atlantic City receives “Junk” status by rating agency Moody’s, as the current casino crises sees no signs of improvement.
Atlantic City was once the great weekend getaway for gamblers that didn’t want to travel to Vegas. The town flourished as millions of tourists rushed to gamble in the lush casinos. However, now e times have changed. Moody’s Investors Service credit rating agency has downgraded Atlantic City by two full levels.
The city has a $245 million general-debt obligation which is linked to a diminished tax base caused by casino closings. As a result, Atlantic City has been stripped off its Baa2 grade and dealt a Ba1 rating.
Gambling news reports that states such as New York, Maryland and Pennsylvania legalized casino operations, which also contributed to a shift in earnings as revenues were redirected other areas.
Analysts don’t see imminent improvement up ahead
Analysts Vito Galluccio and Julie Beglin commented on the dire state of the economy in a city that used to generate millions of dollars in revenue every year. “The downgrade to Ba1 reflects the city’s significantly weakened tax base, revenue-raising ability and broader economic outlook.”
They also added, “These result from ongoing casino revenue declines, expected near-term casino closures, and the impact of sizable casino tax appeals, all of which has stemmed from increased competition from casinos in neighboring states.”
To help them battle the struggling gambling market, the state of New Jersey has decided to legalize mobile casino gambling. However, revenues have not reached the previously expected levels, causing further concern for the industry as a whole.