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Christie Fights Gambling in NYC Shadow as Atlantic City Sputters

Christie Fights Gambling in NYC's Shadow
Some New Jersey lawmakers have proposed ending AtlanticCity’s monopoly on gambling and allowing casino gambling at the Meadowlands Racetrack in East Rutherford, across the Hudson River from Manhattan. Photographer: Jeff Zelevansky/Bloomberg News

Once a week, New Jersey resident Joe Coleman drives 20 minutes into Pennsylvania to play slots at the Parx Casino in Bensalem. While it doesn’t have the beach or glitz of Atlantic City -- an hour and a half the other way in his home state -- it costs him less in gas and tolls.

“I’d never come here if it wasn’t so close,” Coleman, 48, an unemployed plant manager from Bordentown, said in front of Parx at 11 p.m. on a Sunday, up $20 after a night of slots.

New gambling halls including Parx have walloped the industry in New Jersey. Its casinos, all in Atlantic City near the state’s southern end, reported $3.3 billion in revenue last year. That’s down 37 percent from a peak of $5.2 billion in 2006, the same year Pennsylvania’s first slots parlor opened. Last year, that state’s gambling revenue jumped 10 percent to $3.14 billion after it introduced table games in 2010.

Some New Jersey lawmakers say they have the solution: give gamblers a closer option. They want to end Atlantic City’s monopoly and allow casinos at the Meadowlands Racetrack in East Rutherford, across the Hudson River from Manhattan.

Their plan requires a change to the state constitution. And it’s not likely to happen under Governor Chris Christie, a first-term Republican who says he can save the beach town by luring new investment.

‘Waste of Time’

Christie, 49, and state Senate President Stephen Sweeney, a Democrat from southern New Jersey, both say they won’t back any expansion until they see whether a five-year Atlantic City turnaround effort begun last year pans out. Christie’s plan includes a $20 million “Do AC” marketing campaign, tax breaks for developers and state oversight of policing and cleanup.

“Atlantic City deserves to have five years to try and get itself revitalized and back on its feet,” Christie told reporters in Trenton on July 19. “Any conversation about extending gaming to the northern part of the state or any place else in this state is simply a waste of time.”

Assemblyman Ralph Caputo, a Democrat from Belleville in Essex County, says Christie’s stubbornness may cost the state its gambling industry. Caputo sponsors legislation that would ask voters in a statewide referendum to support casinos at the Meadowlands.

“We can no longer afford to keep our heads in the sand,” Caputo said. “We must act or risk that New Jersey will become a gambling afterthought.”

Philly Burbs

The Legislature, which is controlled by Democrats, doesn’t need the governor’s approval to put constitutional amendments on the ballot. It does need support from the Senate president, who decides which bills are posted for votes in his chamber.

“We’ve got to give this a chance,” Sweeney, 53, said of the Atlantic City plan in a July 23 interview at the Statehouse.

Sweeney, from the Philadelphia suburb of West Deptford, said Atlantic City is the heart of the economy for southern New Jersey. The casinos employed about 37,000 people as of June, down from more than 44,000 in 2002, according to state data.

“Aren’t we better off having more people at work and getting our revenue that way?” Sweeney said. “How much is that worth?”

Atlantic City was a bustling resort until the 1960s, when it became riddled with poverty, crime and corruption. The state approved casinos in 1976 and limited them to the city to boost its ailing finances. The first casino, Resorts International, opened in 1978. Gambling revenue rose every year until 2007, when the 18-month recession began, and after neighboring states including Pennsylvania and New York added slot machines.

Yonkers, Poconos

New Jersey needs to look at ways to lure back gamblers who are now heading to Yonkers Raceway and Pennsylvania casinos in Bethlehem and the Poconos, said Jeffrey Gural, operator of the Meadowlands racetrack, which is in the same complex as MetLife Stadium, Izod Center and the American Dream mega-mall under construction.

“Do you think people from northern New Jersey are going to drive all the way to Atlantic City when they want to play the slots for a few hours?” Gural said in a July 25 telephone interview. “Gas is $4 a gallon. You tell me.”

Christie, who took office in January 2010, has made reviving Atlantic City a centerpiece of his plans to revitalize New Jersey’s economy. He has eased regulations and given the state a greater role in policing and development. He awarded Revel Entertainment Group LLC a $261 million tax break to help restart construction of what is Atlantic City’s first new casino in nine years.

Lackluster Results

The governor has said the $2.4 billion Revel resort, which opened April 2, will draw more tourists. Revel reported gambling revenue of $13.9 million in May and $14.9 million in June, ranking it eighth both months among the casinos. Atlantic City’s total revenue continues to decline.

Newer casinos such as Revel “do not appear to be boosting gaming demand in their markets,” Moody’s Investors Service said in a June 27 report.

Pennsylvania’s table-games revenue rose 15.5 percent in June. It now has 11 casinos including Parx, its largest, and SugarHouse, which opened on the Delaware River waterfront in 2010. The Philadelphia area, which once accounted for a third of Atlantic City visitors, has a third gambling house in Harrah’s, run by Caesars Entertainment Corp. in Chester, and the state is offering another Philadelphia casino license.

55 Percent Tax

Five years without casino gambling at the Meadowlands means New Jersey may lose out on $1.75 billion in taxes, Gural said. While he agreed that Atlantic City needs time to turn around, he said results should be clear sooner than Christie’s timeframe. “I don’t think you need five years to see if a marketing plan is working,” said Gural, 70.

Gural, chairman of Newmark Knight Frank real estate, said he is willing to pay Caputo’s proposed 55 percent tax on casino revenue, in line with what Pennsylvania operators pay. He estimated that would generate $350 million a year for the state.

Atlantic City’s 11 casinos pay an 8 percent tax, generating $247 million in the fiscal year that ended June 30. Christie projected that revenue will jump 16 percent this year.

Andrew Zarnett, a gaming analyst at Deutsche Bank Securities in New York, said two casinos at the Meadowlands could bring in as much as $500 million of tax revenue a year and “stop some of the bleeding.”

“A Meadowlands casino pulls back some of the dollars that are being cross-border shopped,” Zarnett said in a telephone interview. “Nothing ever would take back all of it, but some.”

Parrot Heads

Christie remains focused on Atlantic City. A pink Hawaiian lei around his neck, he joined singer Jimmy Buffett on the boardwalk July 24 when Resorts announced plans to add a $35 million casino complex under the Margaritaville brand in 2013.

Such investments won’t lure “convenience gamblers” like Coleman, who just want a quick jaunt to play some games, Caputo said. Coleman, meanwhile, said a casino in northern New Jersey might lure him.

“I’d go up there if it was any better than here,” Coleman said. “I don’t come to get rich. It’s just about passing the time and if I break even, I’m happy.”

Even Atlantic City Mayor Lorenzo Langford, whose community of 40,000 relies on casino taxes, said gambling at the Meadowlands may be an unavoidable prospect.

“For selfish reasons I hope that if we ever see a bill, it goes nowhere,” Langford said in a telephone interview. “It’s not going to bode well for Atlantic City, but I think it’s inevitable.”

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