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Policy Advisors Suggesting Relaxation of Regulatory Rules for Atlantic City Casinos
& Steering Money into Marketing Funds - an Idea Not Widely Embraced

By Bob Jordan, Asbury Park Press, N.J.McClatchy-Tribune Regional News

Oct. 04, 2010--Policy advisers to Gov. Chris Christie want the state to loosen regulations on the Atlantic City casinos, cutting spending by more than $15 million annually, then steering the money into a new marketing fund.

But chasing after tourists at the expense of reduced policing of the $3.9 billion casino industry is an idea not yet widely embraced.

"We lost the gaming monopoly we had in the East and we're hurting, yes, but I don't know if making this kind of trade-off to get $15 million or $20 million for marketing is going to be the answer," said Carl Zeitz, a former member of the state Casino Control Commission and now an industry consultant.

"Weakening regulation, when New Jersey has been the gold standard of regulation in the whole world and has been that for more than a quarter century, doesn't sound like a good idea," Zeitz added.

This year's combined budget of the Casino Control Commission and the state Division of Gaming Enforcement is $66 million. The money comes from assessments paid by the casinos and from licensing fees.

Nevada has a $44 million budget for gaming regulation, but comparing the regulation budgets of the two states with the highest gross casino revenue is difficult because of different mandated responsibilities, said Linda M. Kassekert, chairwoman of the New Jersey Casino Control Commission.

Policy advisers to the governor think New Jersey is paying too much.

So do several South Jersey lawmakers, including Assemblyman John Burzichelli, D-Gloucester. Burzichelli said regulators went to lengths to establish integrity when the first casino opened in 1978. An army of Casino Control Commission investigators -- currently there are 151 investigators out of staff of 270 -- was hired to cover the casinos day and night.

"We still require 24/7 coverage by inspectors. It was appropriate 32 years ago, but to this day, if you want to move a slot machine six feet, you have to have somebody watching them move the machine," Burzichelli said.

"I think there is room for significant restructuring -- not loosening regulations, but taking advantage of advances in sophistication of camera surveillance, information technology, and auditing. It may not save $15 million but it will be multiple millions," Burzichelli added.

In the report by the Governor's Advisory Commission on New Jersey Gaming, Sports and Entertainment, panel members said the state should overhaul the regulations. The savings would create "a fund of $15 million to $25 million annually for the marketing and expansion of Atlantic City," the report said.

"Outmoded concepts and a licensing procedure that is unnecessarily adversarial have made the market less attractive to many respected world-class operators," the report also stated. "The commission recommends a significant regulatory restructuring, with the Casino Control Commission focused solely on a judicial function and with the Division of Gaming Enforcement focused on all regulatory, law enforcement and day-to-day activities."

Zeitz said specifics are missing.

"They don't say how they'll do it," Zeitz said. "People have to remember, legalized gambling was not allowed by the state constitution. It was approved in a referendum and there were major commitments made to the people on regulation, that there would be integrity. We created a system that the banks and Wall Street investors gained confidence in."

The advisory panel chairman, Jon F. Hanson, said the regulations are inefficient and need to be changed."It goes back to the 1970s without much change," Hanson said. "The thought process is: Change the regulations but keep the integrity."

Lawmakers have challenged many of the various gaming and entertainment recommendations in the 29-page report issued by Hanson's panel to the governor in July.

At a hearing run by state Democrats last week, Hanson was forced to defend how the panel arrived at its conclusions. Hanson said no hearings were open to the public and no formal minutes of meetings were kept.

The meetings "were all informal," Hanson said in response to questions by Sen. Paul Sarlo, D-Bergen. "We had no staff, and are all gainfully employed, doing other things," Hanson said.

Some stakeholders in the casino and racing industries complained about a lack of access to panel members, Sarlo said.

"All I can say is, to my knowledge, anyone who called us, we met with," Hanson said.

The Casino Control Commission already has made cutbacks on its own, eliminating some 50 jobs and reducing its annual budget by about $5 million over the last several years.

"With less positions, we've reorganized and reallocated the work," Kassekert said.

Kassekert is one of five full-time board members who are politically appointed and oversee the commission. Kassekert was paid $141,000 last year. The other commissioners have $125,000 salaries.

The commission is an independent agency that works with the Division of Gaming Enforcement, which is an arm of the state Attorney General's Office and conducts investigations into license applicants and reports the results to the commission.

The dual-agency enforcement approach is important to maintain, Kassekert said.

"We can make a good case for retaining the checks and balances that we have. We don't always agree with the division's positions and they don't always agree with us. It creates a healthy tension," Kassekert said.

Sen. James Whelan, D-Atlantic, has introduced a measure that would allow the Casino Control Commission to determine whether or not to continue the 24/7 monitoring of casinos.

"The 24-hours-a-day, seven-days-a-week monitoring and overregulation which was necessary in the early days of Atlantic City gaming has since become a deterrent for new investors seeking to do business in the resort," Whelan said.

Sen. Jeff Van Drew, D-Cape May, said he agrees changes have to be made. "But we have to be careful and not go too far," he said.

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To see more of the Asbury Park Press or to subscribe to the newspaper, go to http://www.app.com/.

Copyright (c) 2010, Asbury Park Press, N.J.

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