Christie Fights Gambling in NYC Shadow as Atlantic City Sputters

Once a week, new Jersey resident JoeColeman drives 20 minutes into Pennsylvania to play slots at theParx Casino in Bensalem. while it doesn’t have the beach orglitz of Atlantic City — an hour and a half the other way inhis home state — it costs him less in gas and tolls.

“I’d never come here if it wasn’t so close,” Coleman, 48,an unemployed plant manager from Bordentown, said in front ofParx at 11 p.m. on a Sunday, up $20 after a night of slots.

New gambling halls including Parx have walloped theindustry in new Jersey. its casinos, all in Atlantic City nearthe state’s southern end, reported $3.3 billion in revenue lastyear. That’s down 37 percent from a peak of $5.2 billion in2006, the same year Pennsylvania’s first slots parlor opened.last year, that state’s gambling revenue jumped 10 percent to$3.14 billion after it introduced table games in 2010.

Some new Jersey lawmakers say they have the solution: givegamblers a closer option. they want to end Atlantic City’smonopoly and allow casinos at the Meadowlands Racetrack in EastRutherford, across the Hudson River from Manhattan.

Their plan requires a change to the state constitution. Andit’s not likely to happen under Governor Chris Christie, afirst-term Republican who says he can save the beach town byluring new investment.

Christie, 49, and state Senate President Stephen Sweeney, aDemocrat from southern new Jersey, both say they won’t back anyexpansion until they see whether a five-year Atlantic Cityturnaround effort begun last year pans out. Christie’s planincludes a $20 million “Do AC” marketing campaign, tax breaksfor developers and state oversight of policing and cleanup.

“Atlantic City deserves to have five years to try and getitself revitalized and back on its feet,” Christie toldreporters in Trenton on July 19. “Any conversation aboutextending gaming to the northern part of the state or any placeelse in this state is simply a waste of time.”

Assemblyman Ralph Caputo, a Democrat from Belleville inEssex County, says Christie’s stubbornness may cost the stateits gambling industry. Caputo sponsors legislation that wouldask voters in a statewide referendum to support casinos at theMeadowlands.

“We can no longer afford to keep our heads in the sand,”Caputo said. “We must act or risk that new Jersey will become agambling afterthought.”

The Legislature, which is controlled by Democrats, doesn’tneed the governor’s approval to put constitutional amendments onthe ballot. It does need support from the Senate president, whodecides which bills are posted for votes in his chamber.

“We’ve got to give this a chance,” Sweeney, 53, said ofthe Atlantic City plan in a July 23 interview at the Statehouse.

Sweeney, from the Philadelphia suburb of West Deptford,said Atlantic City is the heart of the economy for southern NewJersey. the casinos employed about 37,000 people as of June,down from more than 44,000 in 2002, according to state data.

“Aren’t we better off having more people at work andgetting our revenue that way?” Sweeney said. “How much is thatworth?”

Atlantic City was a bustling resort until the 1960s, whenit became riddled with poverty, crime and corruption. the stateapproved casinos in 1976 and limited them to the city to boostits ailing finances. the first casino, Resorts International (MGM) (MGM),opened in 1978. Gambling revenue rose every year until 2007,when the 18-month recession began, and after neighboring statesincluding Pennsylvania and new York added slot machines.

New Jersey needs to look at ways to lure back gamblers whoare now heading to Yonkers Raceway and Pennsylvania casinos inBethlehem and the Poconos, said Jeffrey Gural, operator of theMeadowlands racetrack, which is in the same complex as MetLifeStadium, Izod Center and the American Dream mega-mall underconstruction.

“Do you think people from northern new Jersey are going todrive all the way to Atlantic City when they want to play theslots for a few hours?” Gural said in a July 25 telephoneinterview. “Gas is $4 a gallon. you tell me.”

Christie, who took office in January 2010, has madereviving Atlantic City a centerpiece of his plans to revitalizeNew Jersey’s economy. He has eased regulations and given thestate a greater role in policing and development. He awardedRevel Entertainment Group LLC a $261 million tax break to helprestart construction of what is Atlantic City’s first new casinoin nine years.

The governor has said the $2.4 billion Revel resort, whichopened April 2, will draw more tourists. Revel reported gamblingrevenue of $13.9 million in May and $14.9 million in June,ranking it eighth both months among the casinos. Atlantic City’stotal revenue continues to decline.

Newer casinos such as Revel “do not appear to be boostinggaming demand in their markets,” Moody’s Investors Service saidin a June 27 report.

Pennsylvania’s table-games revenue rose 15.5 percent inJune. It now has 11 casinos including Parx, its largest, andSugarHouse, which opened on the Delaware River waterfront in2010. the Philadelphia area, which once accounted for a third ofAtlantic City visitors, has a third gambling house in Harrah’s,run by Caesars Entertainment Corp. (CZR) (CZR) in Chester, and the state isoffering another Philadelphia casino license.

Five years without casino gambling at the Meadowlands meansNew Jersey may lose out on $1.75 billion in taxes, Gural said.while he agreed that Atlantic City needs time to turn around, hesaid results should be clear sooner than Christie’s timeframe.“I don’t think you need five years to see if a marketing planis working,” said Gural, 70.

Gural, chairman of Newmark Knight Frank real estate, saidhe is willing to pay Caputo’s proposed 55 percent tax on casinorevenue, in line with what Pennsylvania operators pay. Heestimated that would generate $350 million a year for the state.

Atlantic City’s 11 casinos pay an 8 percent tax, generating$247 million in the fiscal year that ended June 30. Christieprojected that revenue will jump 16 percent this year.

Andrew Zarnett, a gaming analyst at Deutsche BankSecurities in new York, said two casinos at the Meadowlandscould bring in as much as $500 million of tax revenue a year and“stop some of the bleeding.”

“A Meadowlands casino pulls back some of the dollars thatare being cross-border shopped,” Zarnett said in a telephoneinterview. “Nothing ever would take back all of it, but some.”

Christie remains focused on Atlantic City. a pink Hawaiianlei around his neck, he joined singer Jimmy Buffett on theboardwalk July 24 when Resorts announced plans to add a $35million casino complex under the Margaritaville brand in 2013.

Such investments won’t lure “convenience gamblers” likeColeman, who just want a quick jaunt to play some games, Caputosaid. Coleman, meanwhile, said a casino in northern new Jerseymight lure him.

“I’d go up there if it was any better than here,” Colemansaid. “I don’t come to get rich. It’s just about passing thetime and if I break even, I’m happy.”

Even Atlantic City Mayor Lorenzo Langford, whose communityof 40,000 relies on casino taxes, said gambling at theMeadowlands may be an unavoidable prospect.

“For selfish reasons I hope that if we ever see a bill, itgoes nowhere,” Langford said in a telephone interview. “It’snot going to bode well for Atlantic City, but I think it’sinevitable.”

To contact the reporter on this story:Terrence Dopp in Trenton at tdopp@bloomberg.net.

To contact the editor responsible for this story:Stephen Merelman at smerelman@bloomberg.net.

Christie Fights Gambling in NYC Shadow as Atlantic City Sputters


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