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Gaming Guru

Chris Jones
 

Atlantic City: All Bets Off Tables

6 July 2006

ATLANTIC CITY – Blackjack players and other gamblers were banished from the Boardwalk early Wednesday, with Atlantic City's kings, queens and aces temporarily locked away because of New Jersey's worsening budget crisis.

Fortunately for Nevada, experts contend that the salty Atlantic surf will lap the Strip's sidewalks before a New Jerseylike political dispute shuts down legalized gambling in the state.

Still, the problems plaguing one of Nevada's largest gaming rivals could spell trouble for the entire casino industry by reducing revenue while raising employee discontent, sources said. Unease on Wall Street could soon follow.

Atlantic City's 12 casinos closed shortly after 8 a.m. Wednesday by order of Gov. Jon Corzine.

New Jersey lawmakers missed their Saturday deadline to approve a new budget, and Corzine shut down most state government agencies that day. The state's casinos closed Wednesday and will remain closed until the impasse is resolved.

Corzine furloughed more than half of New Jersey's state employees. Those sent home included the 190 inspectors legally required to monitor the state's casino and racetracks, operations that employ an estimated 20,000 casino workers in Atlantic City alone.

Only 36,000 state workers in vital roles remain on the job; they're working without pay.

Corzine decided gaming regulators are "nonessential" employees. Despite objections from casino operators, the state Supreme Court refused to override that opinion.

Because Nevada law does not mandate an around-the-clock regulatory presence, Nevada Gaming Control Board member Mark Clayton said problems similar to New Jersey's couldn't happen here.

"Even if we had a similar provision here, given the depth and breadth of gaming and its importance to the state, I imagine that would be an easy conclusion for any governor to make" that continued gaming is essential to the state's interests, Clayton said.

Gaming consultant Richard Wells agreed, adding, "Nevada is quite different. Regulators only go on-property when they need to for inspection or enforcement purposes."

Wells described New Jersey's casino closures as "purely political," echoing the Casino Association of New Jersey's claims that Atlantic City's casinos, not the state, pay gaming regulators.

"That's asinine and ridiculous that (New Jersey) even considered having those people not work," said Wells, a 15-year casino senior executive who now runs Reno-based Wells Gaming Research.

He said gaming regulators could be considered law enforcement agents, who are still on the job without pay in New Jersey this week.

Atlantic City's casino closures kept an estimated 20,000 people from working as dealers, pit bosses and cocktail servers.

Approximately 1,500 displaced workers are expected to rally today outside the statehouse in Trenton, said Patricia Campos, political director with the UNITE-HERE labor union in New Jersey.

"It's unfortunate that workers at the casinos have become political pawns in this budget fight," she said Wednesday.

UNITE-HERE supports a balanced budget, but hopes its rally will remind lawmakers their stalemate has affected the livelihoods of workers.

Campos said 16,000 union members labor in Atlantic City casinos. Another 1,000 work at race tracks in northern New Jersey.

In a Wednesday filing with the Securities and Exchange Commission, Trump Entertainment Resorts said nonunion workers at its three Atlantic City casinos must use vacation or paid time off, or take time off without pay, until the casinos reopen.

Las Vegas-based Boyd Gaming Corp., which owns Atlantic City's Borgata resort in partnership with MGM Mirage, required its locked-out workers to take paid time off, spokesman Rob Stillwell said.

That policy could change depending on the length of the shutdown, he said.

Harrah's Entertainment, another Las Vegas-based company, owns four Atlantic City hotel-casinos. Its corporate spokesman on Wednesday referred questions on employee compensation to the Casino Association of New Jersey.

Time off without pay will hurt casino workers, nevertheless.

"As a dealer, you rely on tips. So it's money out of our pockets," said Lloyd Hopkins, 41, a dealer at Caesars Atlantic City Hotel Casino, a Harrah's property.

Association president Joe Corbo did not return calls prior to deadline.

"We suffer from this stalemate every year," UNITE-HERE's Campos said, explaining balanced budget fights have been common in New Jersey in recent years, though never to this year's extremes. "That creates a lot of instability for our industry and for our members."

Instability was also a concern cited by Ken Adams, a former casino manager who's now a Reno-based gaming consultant.

"What's going on in New Jersey, from a casino industry standpoint, is hugely frightening," Adams said. "What has this done to the long-term viability of investments in Atlantic City? The longer this goes on, the less people are going to say, 'Let me rush right in there and buy some of those Trump (stocks).' "

Damage to one of the few perceived stable U.S. gaming markets is bad for the industry as a whole, Adams said.

New Jersey's problems are compounding those in another so-called stable gaming jurisdiction, Mississippi, which was ravaged by hurricanes last year and has yet to fully recover.

New Jersey's problems involve a $4.5 billion state budget gap, which Corzine hopes to cut by raising the state sales tax from 6 percent to 7 percent.

Democrats who control the state Assembly oppose the tax increase, estimated to cost the average New Jersey family $275 per year.

"It is deplorable that the people of this state are left in such a painful position," Corzine told lawmakers Wednesday. "The people of New Jersey have every right to be angry."

Wednesday marked the first time Atlantic City's 12 casinos had been closed since legalized gaming debuted there 28 years ago.

"I never thought this would happen," said Ruth Dodies, 77, of Philadelphia, standing at a closed entrance to Trump Plaza Hotel and Casino. "It doesn't make sense. It really doesn't."

The shutdown could cost the casinos more than $16 million that they would normally collect from gamblers each day, not to mention the $1.3 million in taxes taken in by the state.

Hotels, bars and restaurants associated with Atlantic City's resorts continue to operate despite the casino closures.

The casino-hotel's lobbies were empty, though, as buses picked up gamblers to return them home but did not drop off new ones.

"There's no business coming in. It's all going out," said Joseph Lowry, a cocktail server at Tropicana Casino and Resort.

Many of the gamblers that were in town Wednesday headed for the exits rather than stay around when the casinos began collecting their chips and ushering them off the casino floors.

"I came down here to have fun, and this is hampering my fun," said Janice Sidwa, 60, of Williamstown. "Now we're trying to figure out what we're going to do all day. What else do you do down here?"

Adams, for one, hopes Nevada can capitalize on New Jersey's current troubles.

"I'm told that there are $78 round-trip flights on two different airlines to Las Vegas from the East Coast," Adams said. "That's one thing Nevada can do about it."