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Atlantic City Casino's Generosity Hurts Convention Center

ATLANTIC CITY, New Jersey – As reported by the Press of Atlantic City Press: "The casino industry's generosity toward high rollers is causing a cash crunch for the Atlantic City Convention Center.

"Reacting to a rising trend in casino comps, the Atlantic City Convention & Visitors Authority on Thursday transferred $1 million from one account to another to protect against shortfalls in the center's financing.

"The funding problem stems from a drop in luxury tax revenue caused by the casinos' habit of giving their best customers free hotel rooms, a practice known as comping.

"Revenue generated by the city's luxury tax on hotel rooms, drinks and entertainment is used to pay off the $268 million convention center's construction bonds and cover its operating losses. But when rooms are comped by the casinos, no tax is collected on them, which cuts into the revenue stream.

"…The luxury tax generated about $18 million in 2002, but it appears the figure will fall to about $17 million this year, convention officials said.

"…A similar cash-flow problem at the convention center occurred in 1997, when a rise in casino comps depleted the luxury tax revenue…"

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