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Atlantic City gaming industry about to undergo state takeover

Posted on July 22nd, 2010

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Atlantic City Governor Christie is scheduled to unveil plans of a state takeover of Atlantic City’s gaming industry. The state takeover will include removing from city officials the control and power over Atlantic City’s municipal functions on AC casinos and handing over the control to the state. This will include functions like police and garbage pickup and disposal. The effect will be that the Atlantic City casino district will become a separate government within the city. The intention of these plans is to give the Atlantic City casino district a new authority.

The new authority body will report directly to the governor. Atlantic City Convention and Visitors Authority will need to be removed as part of the change. The Boardwalk Hall and the convention center will be included under the new authority. All revenues that will be collected by the Casino Reinvestment Development Authority will remain as funds of the city and will no longer be distributed within the state. The Atlantic City Convention and Visitors Authority is responsible for the promotion and marketing of the gaming industry of the city, while the Casino Reinvestment Development Authority is considered one of the state’s highest earning independent bodies, earning as much as 1.25% of property tax for the state.

The advisory commission made by Governor Christie also suggested for the modernization of the state’s regulation regarding gambling and direct it to a format similar to that of Nevada. The governor created the New Jersey Gaming, Sports, and Entertainment Advisory Commission last February—a 7-member advisory commission to come up with a comprehensive plan aimed at improving the state’s sports, gaming and entertainment industries. Governor Christie said his reason for creating the commission was because of the decline in the revenues made by casinos in Atlantic City. The state is known to have invested millions of dollars to the Xanadu retail and entertainment project that is currently put on hold. An estimated loss of $22 million is also said to come from the horse race tracks for this year.

In response, the advisory commission suggests that the Meadowlands Racetrack either be closed or sold. The Xanadu project is also recommended to be revitalized. The Governor will likely need to have legislative approval for the new plans he made. Senate President Stephen Sweeney clarified that he is not currently familiar with the contents of Christie’s plans, and the same should not be considered the final plans for the city yet. “We’ll be anxious to review the governor’s proposal along with many others to help the gaming industry in the state of New Jersey be more successful,” he said.

Sweeney is not the only one taking the news with shock. Senator Raymond J. Lesniak was also caught by surprise. “I don’t see how this helps Atlantic City,” he said. It offers no revitalization for the city.” Tightening competition from neighboring states like Pennsylvania since 1996 is what causes Atlantic City’s current economic struggles. A collaborative decline in revenues is seen among the 11 Atlantic City casinos. For the first half of the year, revenues were listed to $1.8 billion, a drop of 8.4% from the same period last year. A total number of 5,000 Atlantic City casino employees have lost their jobs, in the span of the last 3 years.

Harrah’s Entertainment Inc., currently owns 4 casinos in Atlantic City and is the biggest casino operator in the area. Senior vice president of government relations and communications for Harrah’s Jan Jones says the company is looking at these changes positively. “Harrah’s Entertainment is very supportive of reinvigorating Atlantic City, and we look forward with great enthusiasm to hearing the components of the plan tomorrow,” Jones said. Harrah’s own the Harrah’s Chester Casino & Racetrack in Delaware County.
“Everyone’s speculating.” said Bob McDevitt, leader of the city’s largest casino union. Hen said rumors have been spreading over the last weeks on what the Governor’s real plans are. “None of them have been substantiated, and I think they’re just being very, very close to the vest on this for their own reasons and so far no one’s breaking. “