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Twelve Atlantic City Casinos Do the Unimaginable, All Gambling Operations Ceased;
First Citywide Shutdown in Atlantic City's 28-year Casino History
By Suzette Parmley, The Philadelphia InquirerMcClatchy-Tribune Business News

Jul. 5, 2006--ATLANTIC CITY -- The casinos here did the unimaginable this morning and ceased all gambling operations amid a state budget impasse that idled New Jersey's gambling inspectors.

Security guards at the Borgata Hotel Casino & Spa and at the 11 other gambling halls in the resort, began escorting gamblers off the floor even before the scheduled 8 a.m. deadline, re-routing them to non-gaming areas of their casinos.

All hotels, restaurants, retail stores, nightclubs, spas and bars that are not on the gambling floor in the casinos will remain open during the shutdown.

Gambler Tony Riga, 40, of East Brunswick, N.J., said early today that he had moved from one area to another in the casino as waves of slot machines were shut down by technicians.

"I think it's stupid," Riga said as he was finally forced off the casino floor just before 7 a.m. "The state is losing all this money. They're shutting down the tourist industry. People are going to get discouraged."

The Borgata began shutting down its 4,000 slot machines at 4 a.m. By 7:20 a.m. it had cleared off the entire cavernous casino floor, including its expanded wing. At 7:45 a.m. a loud voice came over a loudspeaker and said "Gambling is officially prohibited on the casino floor."

Scores of additional state police and casino security watched the casino to be sure all gambling had stopped by 8 a.m.

This was the first citywide shutdown in Atlantic City's 28-year casino history. The first casino opened its doors here in 1978.

Gov. Corzine is scheduled to give a speech in Trenton at 9 a.m. on the budget crisis that has gripped the state. Corzine and the Legislature remain about $1 billion apart on a balanced budget. Corzine has proposed increasing the sales tax from 6 percent to 7 percent to close the gap, while Democratic lawmakers remain steadfastly opposed to it.

Corzine's action brought a quick halt to lottery sales and road construction on Saturday. State parks, campgounds and race tracks were also to close this morning as the historic government shutdown enters a fifth day. Atlantic City's casinos, which cannot operate without state inspectors, will remain shut until the state adopts a budget.

"The only good thing is I'll save money," said Jim Bujak, 54, of Clementine, Camden County, who insisted at 5 a.m. that he could regularly stand in front of a slot machine for 15 hours straight.

The New Jersey Casino Control Commission, the agency that regulates the resort's casinos, will hold a briefing at noon today on the shutdown which could paralyze the state's $5 billion gambling industry.

The dozen casinos here employ about 45,000 and had a payroll of $1.2 billion, according to the casino commission. The city attracted 35 million visitors last year, and generated $490 million in state tax revenue.

The shutdown comes at the worst possible moment for Atlantic City. The peak summer generates about 40 percent of the casinos' annual revenue. Several of the casino-hotels are at full capacity, even during midweek.

This summer was anticipated to be a huge draw for the resort because of all the expanded casinos and new non-gambling attractions, like the $200 million shopping and dining complex, the Pier at Caesars, which debuted last week.

The state stands to lose $1.3 million in tax revenue each day that the casinos stay shut. Eight percent of the casinos' monthly gross gambling revenue goes into the Casino Revenue Fund, which pays for programs that benefit qualifying senior citizens and people with disabilities.

Rob Stillwell, corporate spokesman for Las Vegas-based Boyd Gaming Corp., which owns the Borgata, said major gambling companies, like Boyd, and investors have poured over $3 billion in capital investment into Atlantic City since 2002 because of its low tax rate and stable regulatory environment.

Atlantic City casinos pay a 9.25 percent tax rate on gross gambling revenue. Only Las Vegas, which has a graduated tax rate with a maximum tax of 6.75 percent -- is lower. Pennsylvania, which is about to open slots parlors at racetracks this fall, will charge them a 54 percent tax rate. Delaware's tax rate is 51 percent.

Stillwell and several executives looked, grim-faced, as the casino floor became a ghost town.

"I was here three years ago when we opened," Stillwell said. "I never thought I would see this place empty again. We never thought we'd be at this point."

Stillwell said several issues are being ironed out by the casinos, including whether employees will be paid during the shutdown.

Ironically, today's shutdown comes less than a week after a ceremony by the Borgata to celebrate its $200 million expansion. Several other casinos, including Harrah's, Trump Taj Mahal, and Bally's were also expanding.

With the shutdown looming since last week, the casinos have clearly been in damage control mode. The casinos, which require state gambling regulators to operate, lost a motion last Friday asking Superior Court to declare the monitors, "essential employees" who could keep working during a shutdown.

The ruling, combined with commission chairwoman Linda Kassakert's ruling on Sunday to halt gambling operations today at 8 a.m., came as a one-two punch to the casino industry.

"We are very concerned for our thousands of our employees who will be temporarily laid off, New Jersey's senior citizens who benefit from the casino tax proceeds via the prescription drug program, the many small businesses and their employees that our casinos purchase from, and all of the other significant economic benefits that are derived from our industry regionally and throughout the entire state," said a statement last night from Joseph A. Corbo Jr., the president of the Casino Association of New Jersey, which acts as the voice for the 12 casinos. "Again, we urge the government officials to solve this crisis as soon as possible."

Alyce Parker, spokewoman for Harrah's Entertainment Inc., which owns four casinos in the resort, said additional staff have been put on the gambling floors to tell patrons about the other parts of the casinos that remain open.

"The public has been calling in, and we advise them on what is open," Parker said.

Andrew Zarnett, a gambling industry analyst with Deutsche Bank AG in New York, said the shutdown and the negative news it has generated could impact future investment into Atlantic City.

"Stability is the cornerstone of investment, and the state of New Jersey is unable to operate in a stable environment, thus effecting the casinos," Zarnett said. "That is clearly a negative for investors and on the stocks of these casinos."

Donald J. Trump, who is in Los Angeles filming his reality TV show The Apprentice, has been closely monitoring the situation. He owns three casinos in Atlantic City.

"It's inconceivable that the casinos would shut," Trump said yesterday. "I would certainly hope that everyone involved in getting this resolved would come together and work things out."

Poker and blackjack player Eric Rodriguez, 23, from Metuchen, stood dumbfounded at being forced off the casino floor this morning.

"I'm just waiting to play a game," he said. "I am not happy about this. I didn't come here to shoot the breeze and eat. I'm here to gamble."

Contact staff writer Suzette Parmley at 215-854-2594 or sparmley@phillynews.com.

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Copyright (c) 2006, The Philadelphia Inquirer

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