For years, deed restrictions gave casino companies leverage to reduce competition. Nowhere is this more evident than in Atlantic City, much to the chagrin of developers.
The latest episode revolved around the Showboat, Claridge and Atlantic Club, all former casinos. Authorities hoped restrictions would end as part of the approval of the Caesars and Eldorado merger. They did not, perhaps because of objections from Hard Rock and Ocean Resort, the newest kids on the casino block and the ones closest to Showboat.
Analysts blamed too much competition for the closure of four casinos in 2014, with the customers going to casinos elsewhere on and off the island, according to the Press of Atlantic City.
Analysts also claimed reopening the former Revel as Ocean Resort and the Taj Mahal as Hard Rock might upend the financials at other casinos. Had restrictions been lifted and each property opened a casino, would it undermine an already tenuous financial picture.
How this plays out may be determined in court. Owners for the Claridge and Atlantic Club have appealed the decision from the Casino Control Commission to keep the restriction in place. Now the commission has more time to evaluate the pros and cons outside of the framework of a massive merger.
In other Atlantic City news, the New Jersey Assembly passed a bill September 24 which provides financial relief to a casino industry in Atlantic City, still struggling from the impact of Covid-19 pandemic. A 107-day shutdown of the casinos resulted in more than $112 million in operating losses and a reduction in staffing by almost half.
The state Senate approved its version in June, which was different enough to require changes to make the two bills coincide. The initial versions offered permanent and temporary relief, but the final bill scaled back some of these breaks, according to the Press of Atlantic City.
The legislation the Senate will receive offers a reduction in taxes paid on gross gaming revenue and a monthly deduction against gross gaming revenue equal to the amount of promotional gaming credits used by patrons. The breaks last for a year retroactive to July 2, the date casinos opened again.
The bill also requires casinos to try and bring back many of the former employees and hire new ones to meet increases in business.
“Remember, our goal is to get employment back up to pre-pandemic levels when over 27,000 local families held casino jobs,” said State Senator Chris Brown, a primary sponsor of the legislation. “We have to take these initial steps and develop a plan, not a bailout, to help our local economy recover as quickly as possible.”
Before the bill left committee, lawmakers eliminated tax breaks on hotel and parking fees and also scratched a section to have the Casino Reinvestment Development Authority pay for city marketing. One of the reasons for the cutbacks was a fear that the breaks would cut into the services geared towards seniors and the disabled which rely on casino revenue for funding.
“This bill has been a work in progress,” said Assemblyman Vince Mazzeo. “We all know that the casino industry is vital to the success of the local finances and to the over 30,000 individuals it employs. However, as we have said from the beginning, that success cannot come at the cost of the Atlantic County taxpayer or the hard working families who rely on the services provided by the casino revenues.”
Mazzeo and Assemblyman John Armato opposed another bill that would permit state treasury to provide interest-free loans to casinos, which would hurt the senior freeze and homestead rebate fund.
