With a Deal in Place and Moody’s Findings Clear, Legislators Adjust Tactics

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A Senate committee hearing Thursday saw legislators tweak their arguments in light of a deal between the Assembly and Senate on a bill to expand gaming with a referendum vote and constitutional amendment after its passage in the Senate earlier this week. A report from Moody’s Investor Service finding that two new casino in North Jersey would likely cause more casino closures loomed over the proceedings.

“We view any gaming supply expansion in New Jersey as particularly bad news for the already struggling Atlantic City gaming market,” the agency’s analysts wrote in Wednesday’s report. Atlantic City’s last round of closures, in 2014, cost the city thousands of jobs as four casinos closed due to out-of-state competition.

The study also found that the new casinos would pose a threat to the up-scale Borgata, the Atlantic City casino that has weathered the downturn best.

“New casinos in Northern New Jersey could be much larger than Borgata in scale, equal or better in terms of quality and product offering, and much closer to large population centers in Northern New Jersey and New York City,” the agency wrote.

Senators Jim Whelan (D-2) and Jeff Van Drew (D-1) both predicted an even steeper decline for Atlantic City and South Jersey at the Budget and Appropriations hearing. Assemblyman Chris Brown (R-2) added the Moody’s report to the stable of studies he has cited at numerous legislative hearings. But it was Bergen co-sponsor and committee chair Paul Sarlo (D-36) who brought a completely new tack to his arguments.

While the regional stakes for legislators have been highest for South Jersey supporters like Senate President Steve Sweeney (D-3), who served as primary sponsor with a role-call of Bergen Democrats, Sarlo said during the hearing that he has faced pushback from those who favored the Assembly version of the bill.

“Many of us are getting beat up in our own constituencies,” said Sarlo. “My own Bergen County Freeholder Chairman, who I swore in 24 hours later, said that I was selling out to Atlantic City and sending them way too much money.”

Sarlo was referring to chairman Steve Tanelli, who told PolitickerNJ last week that he was in favor of a version of the bill sponsored by Assembly Speaker Vince Prieto (D-32), one that would have given a greater share of revenues from the new locations to North Jersey.

The compromise reached this week now caps Atlantic City’s share at no more than one third of the new revenue.

Whelan cited conversations he had with Jim Allen, chairman of Hard Rock International, about bringing more Hard Rock dollars to Atlantic City before the expansion effort swelled. With the casino referendum on track to reach the ballot this year or the next and Hard Rock vying for a Meadowlands location, Whelan said the city’s shuttered casino properties will be less likely to see that kind of interest from Allen or anyone else.

“That incentive is gone. That incentive is no longer part of this bill,” he said.

After the hearing, Whelan doubled down and said that likely competition from New York City would doom the new casinos, and make Atlantic City share in the losses.

“No one has been able to explain to me how successful North Jersey casinos will be when, not if, New York City gets gaming,” Whelan said. “When that happens, casinos in both Atlantic City and North Jersey would close, further exacerbating Atlantic City’s and New Jersey’s sluggish economy.”

Van Drew, who was one of only two ‘no’ votes, ramped up his opposition in light of the predicted casino closures after the hearing.

“Whether it is one casino that closes, or multiple casinos, thousands of jobs are going to be lost,” Van Drew said. “Sadly, they will be lost in a region where people can’t find work in other sectors. I hope I’m wrong, but I believe that Atlantic City will be obliterated if this happens. I truly believe this is the difference between life and death for the economy of our area.”

Brown called again for further study of new casinos’ effect on overall state revenue, saying that rivals like Assemblyman Ralph Caputo (D-28) have moved forward without weighing the consequences. Countering Sarlo, Brown pointed to a Deutsche Bank study and said that even a heavy 50% tax rate on casinos in heavily populated North Jersey would not fill the void created by further casino closures in Atlantic City.

“There aren’t enough of those gamblers to make up for the harm and the loss of revenue that will come out of Atlantic City,” Brown said.

After the hearing, Brown took a shot at the Democratic sponsors.

“I am extremely disappointed the Democrat leadership is moving this measure one day after Moody’s released its analysis confirming North Jersey casinos will force the closure of more Atlantic City casinos and, even worse, now threatens Atlantic City’s flagship casino/hotel, the Borgata,” said Brown.

With a Deal in Place and Moody’s Findings Clear, Legislators Adjust Tactics