The closings in Atlantic City have spurred some state lawmakers to consider laws that they believe would have prevented some of the shutdowns. And they also have inspired Governor Chris Christie to offer incentives to Atlantic City government.
In bills that seems directly aimed at Caesars Entertainment, New Jersey legislators have proposed bills to limit the number of casinos that one company can own in the state and prohibit deed restrictions being placed on closed casinos prohibiting their future use as a casino.
Further, if a casino is sold for less than fair-market assessment, another bill would require the owner to potentially repay millions of dollars in publicly funded incentives.
The bills come from Assemblymen Chris Brown, R-Atlantic, and Vince Mazzeo, D-Atlantic, who have watched four casinos close in Atlantic City this year putting about 8,000 workers out of jobs.
The impetus of the bills seem to come from Caesars Entertainment’s closing of the Showboat casino. Unlike the other three closings—Trump Plaza, the Atlantic Club and Revel—the Showboat was still turning a profit. Caesars said they closed the casino the shrink the city’s gambling market and protect its other three Atlantic City casinos.
Brown, has called the closing “unconscionable” and said the state must hold casino companies accountable to their employees.
“When Caesars chooses to close a profitable casino, while also choosing to build a new $880 million casino in Woodbury, New York that certainly raises concerns to me,” Brown told the Press of Atlantic City.
Originally, casino companies could only own three properties in Atlantic City, but that limit was raised to four in 1994. The new law would limit that to two properties, but Caesars would be grandfathered.
“When everybody was fat and happy and revenues were driven hard, we didn’t think there was a problem with casino companies owning four casinos,” Mazzeo told the Press. “The closing of Showboat hurt the people working there, and we’re looking to limit that maybe in the future.”
The bill concerning deed restrictions was also prompted by Caesars actions in the resort. Caesars has closed two other former Atlantic City casinos—the Claridge Hotel and the Atlantic Club—and sold both properties with deed restrictions that they can’t operate as casinos.
Brown has said that the restrictions contradict the city’s zoning laws by reducing the size of the casino district.
The bill targeting state grants, however, come from the closing of Revel. The casino received $261.4 million in state tax incentives when it was constructed. The casino, however, which was never profitable and only open for two years, never received those incentives,
Brown, however, points to publicly sponsored infrastructure improvements that enabled the construction of Showboat and other properties.
Additionally, he said casinos that pay the state’s “alternative investment tax” of 1.25 percent of gaming revenue on improvements, rather than paying a 2.5 percent rate on gaming revenue to the state Casino Reinvestment Development Authority, could be liable for the balance of the larger sum.
“We want to see the casino industry thrive,” Brown told the Press. “But not at the expense of the working middle class.
New Incentives
New Jersey Governor Chris Christie wants new incentives to promote job growth and non-casino development in Atlantic City and has conditionally vetoed a state tax-incentives bill until they are included.
The economic incentive bill passed both houses of the legislature in June and calls for a series of changes to state tax incentive programs Christie signed into law in 2013.
In a message attached to his conditional veto, Christie said the bill “refines already successful initiatives.”
The changing conditions in Atlantic City—where four casino hotels have closed since January—requires more focus on the resort, he said, and the governor wants lawmakers to enhance incentives for non-gambling, economic-development projects in the resort.
Lawmakers can now vote to accept Christie’s changes—including a series of other technical revisions submitted by Christie—or let the bill die.
Christie said Atlantic City should receive similar incentives as several other New Jersey cities and qualify for the most generous state tax credits.
“I am recommending changes to this bill to further encourage non-gaming economic development and job growth in Atlantic City,” Christie said in the veto message. “Similar to Camden and other targeted cities in New Jersey that are in need of economic rejuvenation, I am recommending that non-gaming development projects and private-sector job growth in Atlantic City be eligible for the strongest possible incentives under New Jersey’s successful tax-credit programs.”
State Senator Ray Lesniak, the primary sponsor of the economic incentive bill, told the Newark Star-Ledger that he favors providing a boost for Atlantic City.
“That’s a great idea,” said Lesniak, D-Union. “It’s a big improvement. They need it.”
