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Gaming Guru

Joe Weinert
 

Atlantic City Round-Up

4 March 2003

ATLANTIC CITY -- Credit-card companies would be out of luck collecting gambling debts from New Jerseyans if the transaction on their card were not made directly by the cardholder, under a bill advancing in the state legislature.

The bill would void credit-card transactions if the creditor knew, or should have known, that charges were linked to illegal gambling activities; Internet gambling is illegal in New Jersey.

"Credit-card companies have to do a better job of weeding out runaway charges linked to illegal or underage gambling," said Assemblyman Gary Guear, a bill cosponsor.

Under the bill, gambling losses would be unrecoverable if the charges were made via the Internet, mail, telephone, television, telegraph, fax, cable, wire, satellite or wireless network.

The state, however, would be able to recover a person's losses brought on by illegal Internet gambling or other forms of remote gambling.

"Credit-card companies are in a unique position to protect their clients from exploitation by unscrupulous offshore virtual casinos," said Assemblyman Jeff Van Drew, the other cosponsor.

Research shows that 60 percent of the profit made by Internet casinos comes from the United States, the legislators said.

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Gov. James McGreevey came to the Atlantic City area for the first time since proposing his controversial plan to hike casino taxes and install slot machines at racetracks in northern New Jersey -- and refused to address the subject before a room full of business leaders, including numerous casino officials.

Addressing the Sound Off for South Jersey Legislative Conference, McGreevey gave his standard everybody-must-share-the-pain-of-my-budget-gap-problem speech and never mentioned the casino taxes that have infuriated the Atlantic City gaming industry. The governor spoke for 17 minutes and left without taking questions from attendees or newspaper reporters.

Karlos LaSane, a Park Place Entertainment executive, said he was disappointed that he didn't get to question McGreevey. Given the chance, LaSane said, he would have asked, "Why would you come after an industry that employs over 50,000 people and generates a payroll in excess of $1.1 billion? This is an industry on the rise and is still in the development stage -- why cut it at the knees at this time?"

LaSane continued, "Atlantic city needs a lot -- such as more parking, more rooms -- to be competitive, now that we're going to be joined by other states as gaming jurisdictions. Atlantic City needs all the help it can."

U.S. Rep. Frank LoBiondo blasted McGreevey in his introductory remarks at the event: "There's no other way to put this. These proposals will kill our growth in Atlantic City and Atlantic County, and it will hurt New Jersey overall."

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The president of the union representing one-third of Atlantic City casino workers told a New Jersey Assembly committee that Gov. McGreevey's proposed gaming taxes would hurt front-line employees the most.

Bob McDevitt, president of Hotel Employees and Restaurant Employees International Union Local 54, said the burden of casinos paying perhaps $153 million more in annual taxes would hinder expansion and even threaten existing jobs.

"The reality is that this is the only sector where a newly arrived immigrant or high school-educated person can raise a family, get a pension and good health insurance," McDevitt said. "These are regular people."

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Donald Trump's casino company is still shopping its $475 million bond deal, more than a month after the company expected the deal to be completed.

Wall Street analysts said they've heard little about the deal, with one saying the situation was equivalent to "radio silence." They said Trump's ability to sell the bonds is being hindered by Gov. McGreevey's proposed casino-tax hikes and economic issues such as the faltering stock market and rising gasoline prices.

"It's going to be tough. Most people don't like to buy during periods of uncertainty. My sense is the whole thing is going to be halted," Lehman Brothers analyst Jane Pedreira said.

Trump officials would not comment, other than to say that they hoped that it would be completed by the end of last week.

One source said Janus portfolio manager Sandy Rufenacht had agreed to buy a big chunk of the Trump deal, and that others had agreed in principal to buy amounts accounting for about half of the $400 million in first-mortgage notes. Trump personally and his investment bankers have agreed to buy the $75 million in second-mortgage notes.

(Joe Weinert covers the gaming industry for The Press of Atlantic City. He can be reached at jweinert@pressofac.com.)