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Gaming in Atlantic City..............
A History of Legal Gambling in New Jersey -
Part Seven -- By Stephen Piccolo
Donald Trump - His name is almost synonymous with gaming in Atlantic City so this entire part of the series will focus on his involvement in Atlantic City’s gaming history. It’s “The Art of the Deal, Boardwalk Style”.
It all started on May 22, 1984. It was then that Harrah’s at Trump Plaza opened its doors for business as Atlantic City’s tenth casino. Trump had earlier described the casino as full of “brass and class” and now he was telling everyone that his hotel was the finest building in Atlantic City. The hotel, a joint venture between Trump and Harrah’s (already very successful in the Marina area) where as Trump built the property and the casino was to be managed by Harrahs, had 614 rooms, seven restaurants, a health club, a 750-seat showroom and a 60,000 sq.ft. casino all crammed into a narrow 2.6 acre tract. Trump was a well known real estate mogul in Manhattan coming from money long before his venture into Atlantic City. Harrahs at Trump Plaza was hailed as the beginning of the ‘next wave’ of casino development in the city. This deal was really an ‘artful’ one by “The Donald”. Trump committed $22 million to the project when Harrahs/Holiday Inns Inc. came into the picture. For half interest in the project, they reimbursed Trump the $22 million he had already invested and paid him an additional $50 million in cash plus financing in amounts estimated to be between $170 and $250 million. The total cost of the project was reported to be $220 million which meant that Trump came away with a handsome profit plus 50% interest in the new hotel-casino without risking any of his own money! As an added bonus, Harrah’s/Holiday Inns agreed to manage the property without charge and guaranteed Trump no financial losses in the first five years. Even with this “sweet deal” within six months, Harrahs and Trump had a falling out. Harrahs name was removed from the casino and it became known only as Trump Plaza. The split was over the fact that Trump thought the casino was being mis-managed by Harrahs. One problem was that Harrahs name was associated with low-budget gamblers concentrating on its slot operation while Trump had built 85 luxury suits for high-rollers that were not being attracted by Harrahs style. Even with its expertise in attracting low-rolling slot players, Harrahs failed to meet expectations at Trump Plaza. Earnings for the seven months in 1984 that the casino was open placed the casino seventh out of the ten casinos operating at the time in the revenue race. This enraged Trump, who was used to being number one! Bad blood or not, Harrahs still held its 50% interest in the hotel and managed the property. The feud ended up in the courts after Trumps’ next deal - The Atlantic City Hilton.
In the early 1980's, Hilton Hotels acquired a parcel of land in the marina area and commenced building a hotel-casino to be called the Atlantic City Hilton. Just about the time of completion of the project in February of 1985, the Hilton Corporation made history by being the first company denied an operating license in New Jersey. Barron Hilton issued a statement stating that he was “shocked and stunned” at the decision and promised that the company would take its appeals to the courts. At this time, there were only four members of the CCC sitting as a replacement for resigned commissioner Don Thomas was not filled. Two members voted for Hilton and two were against but Hilton needed a majority vote to be licensed.
In less than one month, the CCC agreed to re-open the hearings for Hilton’s licensing. It was hoped that one of the two “negative” votes would be changed or that the fifth member, Valerie Armstrong, recently appointed to the commission, would be sworn in by the time the hearings began. Here is where the story gets really interesting!
A few days after the CCC announcement on the hearings, Steve Wynn made a bid to buy control of the Hilton Hotels Corporation. A letter to Barron Hilton stated that Golden Nugget offered to buy up to 6.78 million shares (27.4% of Hilton stock) for $72 per share or a total of $488.3 million. Other considerations could have made the transaction worth as much as $1.8 billion. The block of shares to be purchased was owned by the estate of the late Conrad Hilton and when Golden Nugget suspected that Hilton was making moves to block its takeover attempts, Golden Nugget filed a lawsuit against Hilton charging securities violations. The suit asked the courts to stop further solicitation of proxies by Hilton and invalidate proxies previously granted. Golden Nugget filed its suit on April 19, 1985, one day AFTER it learned that Barron Hilton was considering an offer to sell the Atlantic City Hilton to Donald Trump! A Golden Nugget executive issued a statement saying “Hilton was putting its tail between its legs and running away from New Jersey without vindicating its name.” One week later, Golden Nugget offered Hilton $344 million for the Atlantic City property. The offer consisted of cash, 8 percent notes and some undeveloped Atlantic City property which Hilton refused stating that the notes and property were “overvalued”. The next day, Hilton announced that it had accepted an offer of $325 million from Donald Trump. Estimates placed Hilton’s cost at $308 million for its nearly completed hotel-casino. This was the spark that ignited the feud between Wynn and Trump which still lasts today. The only question remaining now was a name for the property. The facility was so near completion that a large Atlantic City Hilton sign was already on the building and the property did open using Atlantic City Hilton chips and tokens. The slots were all fitted with the Hilton “rainbow” design slot glass. The name Trump Palace was bantered around but when Caesars found out about the name, they filed suit against Trump’s use of the name and won even though Caesars Palace was in Las Vegas and the Caesars Atlantic City property was known as Boardwalk Regency. Thus the name Trump Castle finally was the choice. The facility opened in June 1985 and at the formal ribbon cutting ceremony held one month later on July 16, 1985, Trump, with the press in full attendance, took a swipe at Harrahs, his partner on the Boardwalk. He stated that “There has never been a smoother, more successful opening of a casino in Atlantic City.” Without mentioning Trump Plaza by name, he reminded everyone there that “we don’t manage the other facility”. Harrahs was not only Trump’s partner on the boardwalk, but his new neighbor in the marina which placed Trump in direct competition with his boardwalk partner.
This feud, which had been going on for a year, finally ended up in the courts. A suit and countersuit were filed by both Harrahs and Trump. In late 1985 Harrahs, which had become tired of the feud and did not want it to drag on even longer in the courts, approached Trump with a offer to sell him their 50% interest in the facility. Trump accepted and the contracts were signed in early 1986. Trump was now the sole owner of Trump Plaza. The cost to Trump was $67 million and later, he would say “it was one of my most savored transactions”.
Trump’s third property in Atlantic City, the Taj Mahal, was also born out of controversy as it was part of the Trump-Griffin duel in 1988 over Resorts International, the then owner of the of the partially completed hotel. Once again another name, this time Resorts, was on a building that became part of the Trump organization as the deal struck with Griffin gave Merv all of Resorts holdings in Atlantic City and the Bahamas with the unfinished Taj project going to Trump who completed the facility. The casino finally opened in 1990 and ran into financial problems right away. This casino, along with the Trump Castle, have been in and out of bankruptcy reorganization.
As was reported earlier in this series, Trump purchased the then closed Playboy/Atlantis casino hotel in 1989 and ran the place as the non-casino hotel named Trump Regency. In 1996, the casino was re-opened and the name changed to the Trump World’s Fair casino operating as an arm of Trump Plaza.
Trump has had stock and possible takeover tries against Holiday Inns/Harrahs and Ballys plus feuds with Pratt/Sands over the Penthouse property (which was won by Trump). The only casinos not affected by Trump, in one way or another, in Atlantic City would be the Tropicana and Claridge. Now if that’s not a mover and shaker, I don’t know what that is! Trump continues to be a major force in Atlantic City. He has spoken out time and again against Steve Wynn and his plans to open a mega-resort in the marina area along with two other prominent Nevada operators. In fact, Trump (along with Harrahs at his side this time) was the only other bidder for the land (a former landfill) that the city was giving away to any operators who could develop the property. The Trump bid called for the building of a golf course. The city voted for the Wynn plan, one of the few “losses” for Trump in Atlantic City.
Expansion plans for the Castle and the Taj Mahal along with the center boardwalk location for Trump Plaza should keep Trump as a major force in Atlantic City for years to come.
Next Issue - Atlantic City Showboat, past dreams and future developments and a bibliography of materials used for this series.