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New Jersey Eyes Creation of New State Authority to
Takeover Gaming & Entertainment Industries in Atlantic City

By Robert Moran, Suzette Parmley and Maya Rao, The Philadelphia InquirerMcClatchy-Tribune Regional News

July 21, 2010--EAST RUTHERFORD, N.J. -- An advisory commission formed by Gov. Christie on Wednesday recommended sweeping changes to the state's gaming and entertainment industries, including the creation of a state-run "clean and safe" tourism district in Atlantic City.

Christie said he welcomed the recommendations, calling the commission's report "a blueprint that will guide our efforts in managing and protecting our gaming, sports and entertainment resources more responsibly and reforming issues critical to New Jersey's economic future.

"I look forward to reviewing all of the commission's recommendations so that we can put these industries on a solid foundation and path to long-term economic growth and prosperity," Christie said.

The commission's report calls for the creation of a new authority to take over the Atlantic City casino district, and in effect become a separate government within Atlantic City.

The new authority would answer directly to the governor. Boardwalk Hall and the convention center would fall under the new authority, and the Atlantic City Convention and Visitors Authority would be shut down. Revenue collected by the Casino Reinvestment Development Authority would stay in Atlantic City instead of being distributed around the state.

The Casino Reinvestment Development Authority is among the state's wealthiest independent authorities, directing money from a 1.25 percent tax on gaming revenues toward economic development around New Jersey. The Atlantic City Convention and Visitors Authority promotes and markets the gaming industry and other parts of the resort.

The commission also recommends a modernization of the state's gaming regulations that would bring them more in line with those in Nevada.

Christie created the seven-member New Jersey Gaming, Sports, and Entertainment Advisory Commission by executive order in February to recommend a comprehensive plan to boost the state's gaming, sports, and entertainment industries.

In creating the commission, Christie cited declining casino revenue in Atlantic City, tens of millions of dollars in state money already invested in the stalled $2 billion Xanadu retail and entertainment complex near Giants Stadium in East Rutherford, and a projected loss of $22 million for the horse-racing industry this year.

The commission recommends that Meadowlands Racetrack be sold or shuttered. The New Jersey Sports and Exposition Authority's role as manager of the Meadowlands complex would be greatly minimized, and the state would try to revitalize the Xanadu project.

Senate President Stephen Sweeney (D., Gloucester) said he was not familiar with the contents of the report, and suggested that commission's recommendations would not be the final word on Atlantic City.

"We'll be anxious to review the governor's proposal along with many others to help the gaming industry in the state of New Jersey be more successful," Sweeney said.

He noted that a legislative gaming summit was set for August, and said that he wasn't surprised that Christie would want to "get out in front."

Sweeney and other legislators, including Assemblyman John Burzichelli (D., Gloucester), called for the summit to find solutions to the state's struggling gaming and racetrack industries.

Another key Democrat said he was stunned to hear about the takeover plan on Tuesday night.

"I don't see how this helps Atlantic City," said State Sen. Raymond J. Lesniak (D., Union). "It offers no revitalization for the city."

Lesniak is pushing a proposal in Trenton to allow sports betting in the Atlantic City casinos via a constitutional referendum.

"Right now, we're losing those jobs to the competing casino interests in Pennsylvania, Delaware, and New York," Lesniak said in a phone interview Tuesday night. "I'm very troubled by just allowing all of those jobs to flee New Jersey and the revenues that go with it."

The industry is regulated by the New Jersey Casino Control Commission and the Division of Gaming Enforcement.

Since slot machines in Pennsylvania casinos entered the picture in December 2006, the Shore gambling mecca has been on a downward spiral.

Revenues for the first half of this year among the 11 Atlantic City casinos total about $1.8 billion, down 8.4 percent from the same period in 2009.

Over the last three years, more than 5,000 Atlantic City workers have been laid off by the struggling casinos.

Casino representatives said they found out about the commission's recommendations only when news of the panel's report began to spread Tuesday evening. It was first reported by the Star-Ledger of Newark.

"Harrah's Entertainment is very supportive of reinvigorating Atlantic City, and we look forward with great enthusiasm to hearing the components of the plan tomorrow," said Jan Jones, senior vice president of government relations and communications for Harrah's Entertainment Inc., which owns four casinos in Atlantic City and is the biggest casino operator in town. The company also owns Harrah's Chester Casino & Racetrack in Delaware County.

This month, the nine Pennsylvania gambling halls introduced table games, such as blackjack, poker, and roulette -- a move several gaming analysts predict will further chip away at Atlantic City's tumbling revenues.

The two casinos in Philadelphia's suburbs -- Parx, in Bensalem, and Harrah's Chester -- introduced more than 150 table games combined on Sunday.

Initial estimates predict Pennsylvania table games can take about $240 million per year from Atlantic City, or roughly a third of its nearly $1 billion in annual table-games revenue.

"There is a tremendous amount of value at risk," said Kevin DeSanctis, chief executive officer of Revel Entertainment Group L.L.C., which is based in Atlantic City.

The firm is behind the construction of the half-completed $2 billion Revel Casino on the Boardwalk, next to the Showboat. "We have current challenges and it's critical that state government is an active participant in Atlantic City's affairs," DeSanctis said.

Bob McDevitt, who heads the city's largest casino union, said he had heard all kinds of rumors over the last several weeks about Christie's plans.

"None of them have been substantiated, and I think they're just being very, very close to the vest on this for their own reasons and so far no one's breaking. . . . Everyone's speculating," said McDevitt, president of Local 54 of Unite Here.

"If the governor's office wants to take a direct interest in Atlantic City, then it's good news," McDevitt said. "There's always been talk about the state being interested, but it never really comes to fruition. We are in a free fall right now, and we do need the state and the industry and the community to get in line and try and figure out how to reconstruct this industry in Atlantic City and revitalize it."

The commission, led by Jon F. Hanson, was tasked with providing its recommendations by June 30, but Christie extended the deadline to Aug. 1.

Hanson is a former chairman of the NJSEA. The other commission members are: Debra P. DiLorenzo, president and chief executive of the Chamber of Commerce of Southern New Jersey; Robert E. Mulcahy 3d, a former president of the NJSEA and athletic director at Rutgers University; Finn Wentworth, principal of Normandy Partners and founder of the YES Network; Al Leiter, the former Major League Baseball pitcher and YES Network commentator; Wes Lang, managing director of WML Partners L.L.C., a New Jersey private-equity investment and development company; and Robert Holmes, a law professor at Rutgers School of Law in Newark.

The commission is an unpaid advisory body, so it was not bound by open-meetings laws or the Open Public Records Act, a spokesman for Christie has said.

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

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To see more of The Philadelphia Inquirer, or to subscribe to the newspaper, go to http://www.philly.com/inquirer.

Copyright (c) 2010, The Philadelphia Inquirer

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