North Jersey opposition threatens Christie plan for Atlantic City

In 2014, the Meadowlands complex in East Rutherford, N.J., will host the Super Bowl.

By then, if North Jersey lawmakers have their way in Trenton, it could also house a new world-class casino - something South Jersey lawmakers and Atlantic City's struggling gambling halls are adamantly against.

Growing vitriol between North and South over where to put casinos threatens to derail Gov. Christie's plan to overhaul Atlantic City and salvage New Jersey's hemorrhaging gaming industry.

A key piece of the Republican governor's plan - continuing three-plus decades of casino exclusivity for Atlantic City - could prove the trickiest to get through a Democratic-controlled legislature. Christie will have to contend with competing gaming interests, regional loyalties, and conflicting analyses of what's best for the Shore resort.

State Sen. Paul Sarlo (D., Bergen), whose district includes the Meadowlands, is candid about his disdain for the Christie plan. For the last year, he has touted construction of a Meadowlands casino.

If the other parts of New Jersey do not receive economic benefit, the plan is doomed, Sarlo said last week, noting, "I don't believe in maintaining the exclusivity for Atlantic City at the expense of the Bergen and Monmouth County regions of the state."

Under the proposal Christie outlined last month, the state would take over Atlantic City's tourism and gambling district, clean up the city's image, stabilize casinos, and boost convention business.

The plan would put an end to the casinos' annual subsidy to the state's horse-racing industry - $30 million this year and $7.5 million next year, when it expires. The subsidy, which will have brought $176 million over eight years to racetracks at Freehold, Monmouth, Atlantic City, and the Meadowlands, was approved in exchange for their not installing state-run video-lottery terminals.

The North-South rift widened a bit more last week when a key lawmaker, State Sen. Raymond Lesniak (D., Union), wrote to Donald Trump and asked him to consider building a Meadowlands casino.

Under Lesniak's proposal, a percentage of that casino's profits - at least $600 million initially and $100 million dedicated annually afterward - would go to Atlantic City to help its transformation into a tourist and entertainment destination.

Trump - whose Trump Entertainment Resorts Inc. recently emerged from its third bankruptcy and is now mostly owned by New York hedge funds - firmly demurred. He said a casino at the Meadowlands, home to the New York Giants and Jets stadium and a partially built $2 billion retail mall known as Xanadu, as well as the racetrack, would be fatal for Atlantic City.

"There has been such a huge investment from Wall Street and international investors that if you took the focus off Atlantic City, there will be no more investment in Atlantic City," he said.

The problem for Trump, or any other Atlantic City casino operator, is that a Meadowlands casino would compete directly with his gambling interests at the Shore and/or in Pennsylvania.

Harrah's Entertainment Inc., for example, owns four casinos in Atlantic City plus Harrah's Chester Casino & Racetrack, and it is rumored to be interested in taking over the Foxwoods site on the Philadelphia riverfront to build another.

About 64 percent of Atlantic City's customers come from North Jersey and New York; 21 percent come from Pennsylvania, according to the Atlantic City Convention and Visitors Authority, which under Christie's plan would be folded into a state-controlled tourism district.

"The Atlantic City casinos oppose this plan because it would take away business at their New York and Pennsylvania locations," Lesniak wrote Trump.

Lesniak contends that Nevada-based Harrah's (with nine casinos in Las Vegas) is opposed to Internet gaming - which he is pushing for Atlantic City - because it is lobbying Washington for a federal law that would preclude states where the company does business, like New Jersey, from taxing its revenues.

Harrah's, the world's largest gambling company, also is opposed to challenging the federal ban on sports betting, Lesniak says, because it has a monopoly on such betting at its Las Vegas properties. Lesniak has sued the U.S. Justice Department to overturn the federal ban, which applies to all but four states. That case is pending.

Jan Jones, senior vice president of communications and government relations at Harrah's, disputed Lesniak's claims. She said Harrah's supported federal legislation that would legalize Internet poker and allow states where wagers were made to receive tax revenues.

Harrah's would offer sports betting in New Jersey if the federal law were changed, she said: "This is not a New Jersey or a Harrah's issue; it is what Congress dictated to all states."

The four Harrah's properties in Atlantic City employ about 14,000 and account for 40 percent of the resort's annual gambling revenues.

"As one of the largest employers and the owner of more casinos than any other operator in Atlantic City, we are deeply committed to Atlantic City," Jones said.

But Sarlo openly criticized Harrah's at a Democrats-only legislative gaming summit earlier this month in Atlantic City, taking issue with gambling dollars leaving New Jersey for other states.

"Instead of new casinos in other states, why not a new, world-class casino in the shadow of New York?" he asked aloud. "I don't understand why we can't do this."

For those whose livelihoods depend on a healthy Atlantic City, the answer is simple: developing a Meadowlands casino likely would lead to more layoffs and further dry up investment.

The Atlantic City casino industry employs about 38,000 people, who earn $1.8 billion in wages each year. It makes up a third of New Jersey's tourism base and injects $7.5 billion into the state economy, according to Rutgers University economist Michael Lahr.

An analysis to be published this week by Spectrum Gaming Group L.L.C. of Linwood, N.J., puts the amount that Christie's plan would infuse into Atlantic City at about $100 million a year by 2021. That would include savings from streamlined casino regulations, ending the horse-racing subsidy, and keeping all Casino Reinvestment Development Authority funds in Atlantic City.

"It's bold, aggressive, ambitious, and out of the box," State Sen. Jeff Van Drew (D., Cape May), a member of the Senate Budget Committee, said of the governor's plan. "That's exactly what we need, and we need to move quickly."

Van Drew added: "I am absolutely opposed to [video lottery terminals] at the Meadowlands. I will not vote for them."

Kevin DeSanctis, chief executive officer of the half-built Revel Casino next to Showboat, does not favor new competition, either. For the last 18 months, his project has struggled to raise the final $1 billion it needs for completion.

"I do not think that is a viable solution to the issue," DeSanctis said. "I think it's an oversimplification of a very complex subject."

As a consumer, Tom Bonekemper of Quakertown sees it differently. The retired federal worker, who occasionally goes to the Jersey tracks, said Christie should support the $1.1 billion-a-year horse-racing industry and the 12,000-plus jobs dependent on it, from horse trainers to hay-growing farmers.

"He should add slots to the racetracks . . . similar to what has been done in Delaware, Pennsylvania, and New York," Bonekemper said. "Atlantic City is going down the tubes no matter what he does, so why kill the horse-racing industry to try and save a lost cause?"

That and other questions will be addressed at a second gaming summit set for early next month at the Meadowlands.

To read the report of the Governor's Advisory Commission on New Jersey Gaming, Sports and Entertainment, go to http://go.philly.com/ gambling EndText