Atlantic City Weekly

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A Draft Transition Report from the New Jersey Gaming/Sports and Entertainment Transition Committee — encompassing 19 “transition team” reports containing dozens of recommendations for reducing and reforming state government under newly sworn-in Gov. Chris Christie — was recently made public. The report’s introductory comment states that the historic business model of the casino industry has failed. However, a united front and a public/private venture to create Atlantic City as a destination resort may save the city and its casinos. A review of state initiatives to improve Atlantic City must be undertaken immediately. The purpose of the subcommittee transition report is to address the significant issues and financial needs of New Jersey gaming, professional sports and entertainment industries.

New Jersey’s Gaming Industry — a key economic engine for New Jersey with over 38,000 jobs — is at a crossroads, and both directions are painful. Either we maintain a “business as usual” approach with an accelerated economic collision between out-of-state competition and in-state mismanagement; or adopt a standstill governmental and economic reform creating a reengineered and enhanced industry for the “global good” of New Jersey.

The historical significant downturn is primarily due to: 1) increased competition in “Convenience Gaming” in the five state mid-Atlantic region; 2) impact of the “Great Recession” on customer spending; 3) a partial smoking ban has had a material revenue impact estimated at a 10 percent decline; 4) perception of Atlantic City as unsafe and unclean arising from a failure to invest in the area surrounding the casinos and local government’s inability to manage this current reality, in spite of unparalleled tax revenue per capita.

Here is a summary of their short-term goals: A summary of core revitalization and strategic goals are identified for the immediate, medium and long-term goals: the immediate goals are to develop the necessary clean-and-safe initiatives, especially on the Boardwalk, to encourage family traffic. Improving existing regulatory model consistent with competitive markets without sacrificing integrity such as in Las Vegas. Derive substantial savings (potentially in excess of $30 million annually) and mandate to industry a rededication of savings to reinvestment in new business revenue generating marketing.

Implementation of goal-oriented revitalization program managed and executed by state and local agencies — not political appointees — overseeing the effort. Develop a more focused and funded concentration on branding and event marketing. Reestablish Atlantic City as a significant Northeast hub for meetings and conventions. Their medium-term goal is to adopt and implement a master plan for the Boardwalk, marina district and Atlantic City’s entryways. Their long-term goals are to provide a master plan for the inlet and a plan for Bader Field that supports existing Atlantic City investment, and overall positioning of the city.

The key implementation goals to consider are to endorse the above goals with the following bold action:

1) a challenge to casinos to match “seed capital” of New Jersey for Atlantic City Partnership (the newly created ACP, with possibly up to $5 million) in order to “prime the pump.” Integrate the ACP with the Casino Reinvestment Development Authority (CRDA) and Atlantic City Convention and Visitors Authority (ACCVA) to ensure coordinated industry/state agency efforts. State and local agencies to prioritize clean-and-safe efforts.

2) Streamline the Casino Control Act: discussion of regulatory reform could create savings of between $20 million and $30 million annually which could be dedicated to A.C. marketing and redevelopment efforts without sacrificing integrity. New Jersey’s costs compared to Nevada’s are astronomical. Cost per employee is $1,769 in N.J. compared to $196 in Nevada, and costs as a percentage of gross gaming revenue is 1.47 percent in N.J. compared to 0.33 percent in Nevada. Much of the cost is redundancy between the CCC (Casino Control Commission) and the DGE (Division of Gaming Enforcement), especially with respect to staffing. One model is to turn the CCC into a purely administrative judicial function over licensee activity (reducing staffing with the DGE focused on day-to-day regulatory functions and enforcement and instituting actions before the CCC) similar to other models in other jurisdictions.

3) Casinos pay 1.25 percent of GGR (about $30 million per year) toward A.C., South Jersey and North Jersey statutory funds.

4) As for fiscal responsibility; greater efficiency at all government levels, particularly in A.C. where industry pays $180 million per year in real estate taxes. Create a state role of overseer to immediately delve into financial operations to constructively reform current spending. Institute better utilization of the police department, which could assist in the clean and safe initiative.

5) Evaluate with parent stakeholders (state and casinos) how to expand N.J. gaming with the goal of collective investor future growth.

6) Do not waste the money to pursue intrastate Internet wagering or sports betting until federal laws change.

In A.C. they urge making Atlantic and Pacific avenues one-way streets. They want to bolster the police presence and cleanup blighed areas. They want to conduct the state forensic audit of city finances, although one is being done. They also urge providing a state “presence” in city government regarding city finances.

It will be interesting to see which of these recommendations becomes a reality under Gov. Christie’s administration.

Pinky’s Corner airs Monday through Friday from 4 to 6pm on News Talk WOND-AM 1400. His TV show, WMGM Presents Pinky, airs Saturday at 7:30pm on TV40. Pinky’s e-mail address is: pinky@acweekly.com.