Jersey Impasse Closes Atlantic City Casinos

Updated from 9:07 a.m. EDT

Atlantic City casinos were forced to close their doors Wednesday morning as part of an overall shutdown of nonessential government services in New Jersey.

The closures took effect at 8 a.m. EDT Wednesday because New Jersey Gov. Jon Corzine and state Assembly leaders remain deadlocked on a new budget. Until one is approved, nonessential government services, such as gambling regulation, will be temporarily shut down.

The Atlantic City casinos failed to get a reprieve despite two court challenges. The closures come at the busiest time of the year for the city.

Last year, July was Atlantic City's highest-grossing month ever, and the resort's casino industry took in $16.3 million per day, on average.

Trump(TRMP Quote) will be affected most by the shutdown, since all of its casinos are located in Atlantic City. Trump shares recently were down $1.05, or more than 5%, to $19.23.

The company will lose about $750,000, or 1% of its quarterly earnings before interest, taxes, depreciation and amortization, per day in the shutdown, says Steven Gart, a senior investment analyst with Nickel Capital, a hedge fund that invests in the gaming sector.

Harrah's(HET Quote), which gets almost a third of its earnings from Atlantic City, will lose $2.4 million of EBITDA per day -- and if the closure lasts more than three days, the impact will be dramatic enough for Wall Street analysts to lower their third-quarter numbers for Harrah's, Gart says. The company's shares were down $1.61, or 2.3%, to $68.89.

At Boyd Gaming(BYD Quote), which owns the Borgata with MGM(MGM Quote), about $350,000 of EBITDA per day will be lost, Gart estimates. Boyd shares recently traded at $39.12, down 77 cents, or 1.9%.

This is the first government shutdown in New Jersey history. Three years ago, the casinos went to court to seek the right to stay open amid the threat of a shutdown, but a budget was reached at the eleventh hour to prevent a closure.

To watch Nick Yulico's discussion with Gregg Greenberg about Atlantic City and its future, please click here.