\n(Bloomberg) \u2014 As Governor Chris Christie seeks a lifeline for an Atlantic City weakened by a spate of casino closings, lawmakers are considering a move that could doom the oceanside resort.<\/p>\n
\tVoters may be asked as soon as November 2015 to overturn an almost 40-year-old law that gave Atlantic City a monopoly on gambling in New Jersey. The restriction helped turn the tourist spot at the state\u2019s southern end into the top U.S. East Coast gambling destination, until competition in neighboring states led to seven straight years of declining revenue.<\/p>\n
\tWith as many as five of Atlantic City\u2019s 12 casinos closing this year, some lawmakers say allowing gambling in other towns is crucial to reclaim revenue that has gone to New York and Philadelphia. Senator Raymond Lesniak, an Elizabeth Democrat, says the move would help the ailing city because lawmakers can direct new money there. Fitch Ratings, for one, disagrees.<\/p>\n
\t\u201cA northern New Jersey casino would be more of a threat than an aid to Atlantic City, even if you have some kind of revenue-sharing component,\u201d said analyst Alex Bumazhny in New York. \u201cWe view it as more of a risk than an opportunity for Atlantic City casinos.\u201d<\/p>\n
\tChristie, 52, a second-term Republican, is meeting behind closed doors today with political leaders and casino officials on strategies to build Atlantic City revenue on non-gambling attractions including entertainment and retail. The summit comes four years into his five-year plan to revitalize the city.<\/p>\n
\tRating Downgrade<\/p>\n
\tThat turnaround effort, which included more marketing, policing and tax breaks, hasn\u2019t delivered, prompting Moody\u2019s Investors Service to cut the city\u2019s $245 million of general- obligation debt to junk in July.<\/p>\n
\tRevel, the $2.6 billion hotel and casino meant to usher in a new era of opulence when it opened in 2012, ceased operations Sept. 2 after two bankruptcies and a 10-month search for a buyer. The Atlantic Club closed in January and Caesar\u2019s Entertainment Corp.\u2019s Showboat shut on Aug. 31.<\/p>\n
\tA fourth, Trump Plaza, is set to close Sept. 16, and a fifth, Trump Taj Mahal, may shut in mid-November, according to people with knowledge of the situation. Robert Griffin, chief executive officer of Trump Entertainment Resorts Inc., which owns the two properties, declined to comment. Trump, who owns about 10 percent of the company\u2019s stock, has no active management role.<\/p>\n
\tTax Comparisons<\/p>\n
\tThe growth of gambling in Pennsylvania, Delaware, Maryland and New York cut casino revenue in Atlantic City to $2.9 billion last year from a peak of $5.2 billion in 2006. The drop means less money for New Jersey, which collects an 8 percent tax from casinos and dedicates the money \u2014 $205 million last year \u2014 to programs for senior citizens and the disabled.<\/p>\n
\tFitch, in an Aug. 29 credit market commentary, estimated a drop to $2.5 billion in 2015, then \u201ccloser to $2 billion as new competition opens in neighboring states and, possibly, northern New Jersey,\u201d said Bumazhny, the rating company\u2019s director of gaming, lodging and leisure.<\/p>\n
\tBumazhny, in a Sept. 5 telephone interview, said a North Jersey location would attract \u201cpretty good competition for gaming licenses\u201d because of population density, proximity to New York City and the state\u2019s comparatively low casino levy. Pennsylvania taxes slots at 55 percent; four casinos to open in New York will pay a range of 10 percent to 45 percent tax on slots and table games.<\/p>\n
\tVoters Wary<\/p>\n
\tNew Jersey, the first Northeastern state to legalize gambling, did so in 1976 with a referendum that limited it to one location to revive the decaying resort. It grew to become the second-largest U.S. gambling market after Las Vegas, and lost that spot to Pennsylvania in 2012.<\/p>\n
\tExpansion of casinos beyond Atlantic City faces another hurdle in New Jersey voters, who rejected widespread gambling in a 1974 ballot question and who remain opposed, 50 percent to 42 percent, to allowing it in other towns, according to an Aug. 4 poll by Fairleigh Dickinson University\u2019s PublicMind.<\/p>\n
\tStill, Senate President Steve Sweeney, from the Philadelphia suburb of West Deptford, says an Atlantic City breakout is inevitable.<\/p>\n
\t\u201cWe used to collect a half-billion dollars in tax from them \u2014 now it\u2019s down to about $200 million,\u201d Sweeney, the state\u2019s highest-ranking elected Democrat, said Sept. 4. \u201cWe need to find a way to bring that back up.\u201d<\/p>\n
\tMeadowlands Proposal<\/p>\n
\tConstitutional amendments like the one Lesniak is proposing don\u2019t need the governor\u2019s approval. The lawmaker, whose party controls the legislature, said he is confident voters will support the measure if it limits new casinos and spells out how the money would help Atlantic City. He expects the most opposition from New York and Pennsylvania, as well as the gambling industry.<\/p>\n
\t\u201cTo let that money leave the state, and those jobs go elsewhere, is not the solution,\u201d Lesniak, of Elizabeth, said by telephone on Sept. 4. \u201cThe only hope for Atlantic City is a North Jersey casino.\u201d<\/p>\n
\tNorth Jersey lawmakers have long pushed to allow gambling terminals at the Meadowlands horse racetrack in East Rutherford. Their efforts were stymied after casinos lobbied against it.<\/p>\n
\tKevin Ortzman, president of the Casino Association of New Jersey, which represents six properties, didn\u2019t return a phone call for comment placed Sept. 5 to his office at Bally\u2019s Atlantic City, where he is senior vice president, general manager and chief executive officer. He holds the same titles for Caesars Atlantic City.<\/p>\n
\tHeading North<\/p>\n
\tIn recent months, Fireman Capital Partners Chairman Paul Fireman has been discussing building a casino in Jersey City, Lesniak said. The plan calls for a $4.2 billion, 95-story casino, hotel and motor-sports stadium on Fireman\u2019s golf course along the Hudson River. Fireman, whose private-equity firm is based in Boston, didn\u2019t respond to a voicemail message for comment on the plan Sept. 5.<\/p>\n
\t\u201cIncreased competition is only going to hurt Atlantic City more, and casinos just aren\u2019t the revenue source for the state that they were 10 or 15 years ago,\u201d said Dan Cassino, a Fairleigh political-science professor and poll analyst.<\/p>\n
\tMore New Jersey government news: TNI NJ GOV U.S. muni-issuer fundamentals: MIFA Top municipal finance stories: TOP MUN<\/p>\n
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