Image: Proposed resort
AP
This artist's rendering shows how the sprawling three-tower design would look. "We ... hope to re-energize the city's resort offerings and attract a new market of affluent East Coast customers," said Terry Lanni, MGM's chairman and CEO of the casino operator.
updated 10/10/2007 4:09:22 PM ET 2007-10-10T20:09:22

MGM Mirage Inc. plans to build a mega-casino resort worth up to $5 billion that will dwarf anything Atlantic City has seen before, the company said Wednesday.

The move is part of an ongoing gamble by casino operators to polish Atlantic City's image and attract upscale customers who want to do more than just bet money.

The project, which will be called MGM Grand Atlantic City, will cost between $4.5 billion and $5 billion, not including the land value and associated expenses, the company said in a statement.

It will be built on a 72-acre site at Renaissance Pointe that MGM owns, next to the Borgata Hotel Casino & Spa, which the company co-owns with Boyd Gaming Corp.

"We ... hope to re-energize the city's resort offerings and attract a new market of affluent East Coast customers," said Terry Lanni, MGM's chairman and CEO of the casino operator. "We believe the success at Borgata demonstrates the eagerness for further evolution of the nation's second-largest gaming market."

The project will consist of three hotel towers with more than 3,000 rooms and suites.

It will feature the largest casino floor in Atlantic City, with 5,000 slot machines, 200 table games and a large poker room, a 1,500-seat theater, as well as restaurants, nightclubs, a spa, 500,000 square feet of retail space, and a convention center.

The city's 11 casinos have invested billions of dollars to attract more upscale visitors who are drawn by entertainment, dining and shopping options, as opposed to day-trip gamblers who ride a bus into the city, play for a few hours, then go home.

"It's a very exciting project that is another step in Atlantic City's evolution to a full-scale destination resort, which is critical given the competition we currently face," said Joe Corbo, president of the Casino Association of New Jersey.

Atlantic City's casinos are being hurt this year by slots parlors in Pennsylvania, Delaware and New York which are siphoning off gamblers that were once Atlantic City's exclusive customers.

Atlantic City's gambling revenue fell 4 percent from the start of the year through August, compared with the same period last year. It may mark the first annual revenue decline in the city's 29-year history of gambling.

MGM plans to build on about 60 acres of the site, setting 12 aside for future development, which may include a residential component. That is the same model the Borgata used when it opened in 2003. It is currently building a second hotel tower called The Water Club, which is expected to open before next summer.

Ground breaking is expected next year, with an anticipated opening in 2012.

MGM's stock dipped 68 cents to $99.07 in early trading, but the drop follows a recent run-up in the shares from $84 at the beginning of September.

Analysts were pleased with the news.

"It is a bet on what Atlantic City can become, not on what it is right now," said Susquehanna Financial Group analyst Robert LaFleur. "We are long-term believers that the market can transition from a predominantly day tripper market to more of a Las Vegas overnight destination."

Several analysts speculated MGM Mirage might take on a joint venture partner such as Dubai World, which recently announced it would take a 4.9 percent stake in the company and invest billions in joint ventures in MGM Mirage projects on the Las Vegas Strip.

Copyright 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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