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Bill To Allow 4 Small Casinos In Atlantic City

Posted on March 23rd, 2010

Atlantic City’s gambling industry, the second-largest in the country, has been battered by a double whammy – the economic recession and competition from neighboring states. To keep up with the changing times, a bill will be introduced Monday by former Mayor and now state Senator James Whelan that would authorize the construction of four new small casinos in a gambling hub of vast and glitzy casinos and huge luxurious hotels. The city allows a minimum of 500 rooms and some hotels have more than a thousand rooms.

The four smaller casinos eyed by the legislation would have at least 200 rooms and would be charged a lower entry fee. The discounted fee is expected to trigger a formidable opposition from the existing casinos, although proponents view the proposal as a way out of the crisis that’s greatly affecting the gambling city. “The world has changed, and Atlantic City has changed,” Whelan said. “In 1978, Atlantic City desperately needed hotel rooms and nightclubs and the amenities that go along with a first-class hotel. Five hundred rooms made all the sense in the world. But where we are today, you can go to Philadelphia or Delaware or other jurisdictions where the entry fee to build is much lower, you can get in for tens of millions of dollars. In Atlantic City, 500 rooms cost you $800 million, minimum, and nobody’s writing checks for $800 million or $1 billion nowadays.”

The former CEO of the AtlantiCare hospital system, George Lynn said, “The more people that come to Atlantic City, the more that small businesses prosper; we’ve seen that again and again,” he said. “These boutique casinos will help Atlantic City differentiate ourselves from our competition, which is something we absolutely have to do.” Predictably, existing casinos are protesting. Mark Juliano of Trump Entertainment Resorts said, “I think it’s a terrible idea. We all played by these rules for a long time. To change the rules now when we’re really hurting is not fair and it’s not right.”

Bob McDevitt, president of a labor organization of casino hotel employees said, “You’re cheapening the billions and billions of dollars already invested in Atlantic City, and changing the definition of what gaming in New Jersey is. If you want to enter the nation’s second-largest gaming market, you better be able to pony up the money to do a first-class facility. Otherwise, you have no business being here.” Robert Boughner, president of the Borgata Hotel Casino and Spa said state lawmakers should instead work hard at improving demand rather than adding supply. Large casinos currently operating in Atlantic City pay tax of a little over 9 percent. Under the proposal, the new smaller casinos would be charged a tax of more than 14 percent to offset their lower entry fee.

Incentives would be offered to encourage owners to add rooms to their boutique hotels. Those who put up hotels with 200 rooms would be allowed 20,000 square-feet of casino space. If, within five years, they increase to 500 rooms, they would be given 30,000 square feet of casino space and the city would pay them back the extra 5 percent they paid in taxes. But if the owners did not increase the number of rooms after five years, the money they paid the city would be used for the expansion of other casinos and for other infrastructure projects.