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New Jersey Senate Approves Two New Casinos

Posted on October 4th, 2010

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Before last week’s end, the state of New Jersey saw two events that could greatly shape the future of gambling in the area: the last of a series of gambling “summits” that had seen the major players of the gambling industry converge on different subjects and a session of the state Senate. The former dealt a slight blow to the horse racing industry, as it is now apparent that the casino industry cannot give dole outs to the latter anymore. The Seante session seems to be a bit of good news to Atlantic City’s struggling casino industry though; The Senate of the state approved almost unanimously a bill that would allow new casinos, two of them to be exact, to be given licenses in Atlantic City.

Sen. Jim Whelan (D-Atlantic City) sponsored the bill. The bill would require the two casinos to only have 200 rooms, 300 rooms fewer than the required 500 rooms for every gambling resort as per state law. The two casinos would also be allowed to have their gambling floor space smaller than the requirement pressed on the old casinos. Both properties would be constructed in areas closer to the Boardwalk. One of the two facilities will not stay “underutilized” though, as it would be expanded into a full-blown casino with a hotel that would have 500 rooms and a bugger gambling floor space. This is expected to happen within five years. After the vote, Senator Whelan gave an interview, where he said, ‘We’ve seen larger projects die on the vine because investment capital dried up, and no one is willing to take a chance during a difficult economic period. Not only does this bill lower the investment threshold to get new casinos in to redevelop blighted areas in Atlantic City, but it creates a safety net so that development capital is available in good times and bad, and a guarantee that construction actually takes place.”

The proposal for these “boutique casinos” was first hinted by lawmakers last spring. Back then, Republicans were not that responsive to the concept. Senator Whelan was even approached by casino executives who were represented by the Casino Association of New Jersey that they were against the idea during a hearing of the Senate wagering committee. Joe Corbo, who was then the head of the association, voiced out concerns that an additional two casinos would be over-saturating a market that is already in bad shape. Furthermore, the association fears that the new casinos will not meet the high standards that the law has set for gambling resorts. In response to those concerns, Whelan made some amendments to the bill, first by decreasing the number of new licenses being proposed to two from the original four. Moreover, the senator also limited the projects that will be in place for the newly constructed facilities. The amendments forwarded by Wheeler, especially the second one, eventually persuaded the two initially reluctant assemblymen from Atlantic County who are Republicans to be behind the plan.

Assemblyman Vincent Polistina, before the vote, said, “We need to get people back to work in Atlantic County, and bring in capital investment.” Polistina and fellow assemblyman John Amodeo have claimed that they will be the co-sponsors of the bill’s Assembly version. The licensees who will win the two properties will have to pay the state $2 million once they commit to the license. The payment would be allotted to the city government and the state, which they will use to improve infrastructures in the area of the proposed casinos. Expansion will be something the two licensees would have to consider, as they would be paying 5 percent of their total gross revenue to an account that they can use for improvement and expansion. After five years, should they choose not to expand, they will have to pay an additional 5 percent of gross revenue to the same fund, the money to be utilized by other casinos in the city businesses or by the government of the city on improvements in the Boardwalk area.

Hard Rock Chief Executive Officer Jim Allen, whose company is said to be a “sure shot” of getting one of the two licenses, said, “Certainly, if this bill passes, we’ll continue to travel down this path. We are still very enthused about a Hard Rock in Atlantic City.”