A group led by billionaire investor Carl Icahn is offering $200 million to buy the Tropicana Casino and Resort in Atlantic City.

The low-ball offer shows just how steep a toll the recession has taken on the economy and the casino industry in particular; a year ago, the Tropicana was expected to fetch $1 billion.

Nonetheless, the bid by the casino’s secured lenders represented a breakthrough in the tortured effort to sell one of Atlantic City’s largest casinos, which has been operating under a state-appointed conservator since being stripped of its casino license in December 2007.

Icahn’s offer sets the minimum price for the Tropicana in a bankruptcy-court auction expected to be authorized within two weeks.

Other parties are free to submit higher bids. If no one else does, the Icahn group gets the casino-hotel in return for cancellation of $200 million worth of the debt they hold in the facility.