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Thursday, July 22, 2010


Gov. Chris Christie Announced Plans for a State Takeover of Atlantic City's Casino District
By Juliet Fletcher

Gov. Chris Christie unveiled the first specific details of how Atlantic City's casino and tourism district may come under state control.

Standing at the New Meadowlands Stadium, on the 50-yard line, Christie held up the finished report by his advisory commission on gaming, sports and entertainment, which contains recommendations on making the three industries solvent. Christie said the report, showed "breadth, depth and boldness."

Christie is appearing at 2 p.m. in Atlantic City for a second press conference.

His historic announcement aims to strip away decades of regulation surrounding the casinos, hoping to copy the gambling rules in Nevada. Also, Christie hopes to prioritize using casino tax revenue to fund Atlantic City's blighted areas.

Focus on Atlantic City

Atlantic city and state officials have naturally focused most on the governor's plan to create a state-run portion of Atlantic City, in a plan already described as a city within a city. Christie said he could no longer watch the "teetering" of Atlantic City's institutions.

He said he gave "fair warning" to Atlantic City's government to fix problems pointed out in a recent state audit or face state takeover.

He said he wanted to see the state run a clean and safe tourism district there within a year.

"Delay leads to demise," he said.

Christie said he doesn't expect the proposed changes to change the tax structure for Atlantic City's casinos, up or down.

At this point, casino companies would not save any new taxation, but he said that the Atlantic City Tourism District would operate in a "private-public partnership" and said that casino companies and future investors would be expected to provide significant funds for the partnership.

That means that the state will operate services within the district, but casinos would also help fund those services.

During his speech, Christie stressed the need to make Atlantic City "clean and safe."

Referring to long-term, wasteful spending by successive Atlantic City governments, he said "Atlantic City has had a historically corrupt, ineffective, inefficient government."

Those leaders, he said, had been "riding the crest of the gaming wave when we have a monopoly."

Now that Atlantic City faces competition from neighboring states, which are expanding gaming, Christie said "we have to create a new wave."

Gaming enforcement would be streamlined, he said. He described the current system as an antique car."


New Jersey Democrats appeared to be playing politics with Christie's proposal only about half hour after it was released.

In a prepared statement issued by New Jersey Democratic leaders, who called the plan "underwhelming and incomplete," they stressed the need for a planned gaming summit of legislators and gaming industry officials to work out a better proposal. The summit is the Democratic alternative to Christie's plan.

State Senate President Steve Sweeney, D-Gloucester, Cumberland, Salem, said Christie's plan "failed to offer proposals that could actually grow the industry, attract new investment and restore the state's reputation as the East Coast's preeminent gaming destination."

"Anyone who walks the Atlantic City Boardwalk for five minutes would come to the same conclusions that it took this commission six months of closed-door meetings to reach," Sweeney said.

"Improving New Jersey's gaming and entertainment industry means more than just cleaning the streets and slapping on some paint. It means bringing new products into the market that will attract visitors and beat back the steady stream of new competitors. It means creating jobs and welcoming businesses. This report only goes half way."

Sweeney said the report makes the need for the gaming summit "all the more vital and pressing." He said the summit would use Christie's report as a baseline for discussions, but would also deal with the more detailed economic and market-based issues the gaming industry needs to confront in creating a vision for long-term viability.

As state Senate president, Sweeney's support of the measure is needed to get it through the Legislature.

Officials in Mayor Lorenzo Langford's administration said the mayor has been holding meetings all morning about the governor's proposal, including discussions with some members of his Strategic Planning Committee.

But Langford hadn't received a copy of the report as of 10:30 a.m. Kevin Hall, the mayor's spokesman said. Langford planned to reserve comment until after Christie's speech in front of Boardwalk Hall. He also said the mayor may be seeking to get some face time today with the governor or one of his representatives.

The unfinished Revel project

The commission also focused on the state of Revel Entertainment Group's unfinished megaresort in the city's South Inlet. The property was part of a small collection of initiatives the state hopes to tackle immediately, including identifying "a catalyst" to monitor progress at the stalled construction site and to recommend further state involvement.

Revel all but shut down its construction of its $2.5 billion casino project this spring after the upstart company failed to obtain financing for its interior development. Investment giant Morgan Stanley bailed out of the project soon after, reporting more than $900 million in losses from its investment in the project.

Christie has already shown his support for the project, which many have said is instrumental to the future success of the resort, by signing legislation that would potentially supply more than $300 million in future state sales taxes to be infused in the infrastructure around the site.

The report did not make specific suggestions about additional state involvement.

On Xanadu, Christie said, "Make it work or tear it down."

Key recommendations

The report's key recommendations are:

  • To create a state-run portion of Atlantic City, covering the casino zone, the Boardwalk and marinas.

  • To delay all talk of any expansion of gaming outside Atlantic City, including video-lottery terminals at racetracks, for a number of years until investment has a chance to return to Atlantic City

  • The Meadowlands Racetrack could be closed or sold, possibly to one of the state's horsemen's groups for a token $1

  • The Izod Center could be privatized or sold.

  • The state would try to refinance the delayed Xanadu project in the Meadowlands, and would seek enabling a new developer who would commit to expanding entertainment and not just retail at the complex.

On Atlantic City, the report's recommendations are:

  • To create a zone within the city which will fall under the control of a new authority reporting directly to Christie.

  • To develop a master plan for that district.

  • To build a private-public partnership in charge of city marketing.

To fund the changes, the report recommends:

  • Ending the subsidy agreement which saw casinos paying horsemen's groups $30 million a year.

  • Closing the New Jersey Sports and Exposition Authority, which operates the state-owned sports stadiums and racetracks but which has needed repeated injections of emergency state funds to remain afloat.

  • The NJSEA recently declared its debts of $38 million were so bad that it would need a state bailout.

  • To use savings made by scrapping the ACCVA, which received criticism from Christie for its high staff salaries
Photo by: Vernon Ogrodnek

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