2007-10-10 19:10 (New York)
By James Temple
Oct. 10 (Bloomberg) -- MGM Mirage, the world's second-largest casino company, plans to spend as much as $5 billion on a new resort in Atlantic City, New Jersey, a bet some supporters believe will help stem the city's declining gambling revenue.
The 3,000-room MGM Grand Atlantic City hotel and casino will be adjacent to the Borgata Hotel Casino & Spa, the company said today. The facility, which may open in 2012, is the latest in a line of proposed Atlantic City casinos.
Revel Entertainment Group LLC said last month that it filed plans to build a $2 billion, 3,800-room resort. Pinnacle Entertainment Inc. said last year that it would build a $1.8billion casino on the site of the Sands. The Borgata, a similar development half-owned by MGM, opened in 2003.
``We think the success at Borgata demonstrates that there is a demand for this type of product in Atlantic City,'' spokesman Gordon Absher said.
The new projects, which include theaters, dining, spas and other non-casino entertainment, will help Atlantic City compete more effectively against the gambling offerings of nearby cities, said Joseph Corbo, president of the Casino Association of New Jersey.
``We're seeing the transformation of Atlantic City, already in progress, from a day trip market to more of a destination resort market'' akin to Las Vegas, Nevada, Corbo said.
New Jersey Investment
MGM is boosting its New Jersey investment even as spending in Atlantic City sinks amid increasing regional competition, principally from combined horse racing and slot machine operations in Yonkers, New York, and Philadelphia. Gambling revenue in the city declined 11 percent in September, according to the New Jersey Casino Control Commission.
MGM, which is majority-owned by billionaire Kirk Kerkorian, posted record profit of $360 million in the second quarter, buoyed by higher spending at its Las Vegas resorts. MGM said its $5 billion Atlantic City budget doesn't include the cost ofacquiring the site.
The company's shares declined $1, or 1 percent, to $98.75at 4:26 p.m. in New York Stock Exchange composite trading.
Harrah's Entertainment Inc. is the world's biggest casino company.
--Editor: Skillman (mno/tlb/ecw/scc/ecw)
To contact the reporter on this story:James Temple in San Francisco at +1-415-743-3588 orjtemple@bloomberg.net
To contact the editor responsible for this story:Michael Nol at 212-617-2384 or mnol@bloomberg.net.
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