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Senator Whelan Introduces Bill To Lower Room-Threshold For Casinos

Senator Jim Whelan, D-Atlantic

Measure Would Encourage Competition, Economic Growth from Smaller Casino Developers

TRENTON – Senator Jim Whelan, the Chairman of the Senate State Government, Wagering, Tourism and Historic Preservation Committee, today introduced legislation which would lower the minimum-room threshold for developers seeking to build a casino in Atlantic City, in order to foster economic growth in the casino industry and maintain the viability of casinos in New Jersey.

“As we face the sluggish economy and increased competition from our neighbors, we cannot afford the status quo,” said Senator Whelan, D-Atlantic. “The key to any resort destination is new product. Unfortunately, this tough economy makes it difficult to finance new major development. This bill would help to reinvigorate Atlantic City and put people back to work.”

Senator Whelan’s bill would create two new alternative methods for casino licensure by the State’s Casino Control Commission. Along with the traditional, 500-room capacity, minimum 60,000 square foot casinos, developers would now have the option of building a small-scale casino facility, which is not more than 20,000 square feet, and not less than 200 qualified sleeping units. Developers would also have the option of building a staged casino facility of not more than 30,000 square feet, and not less than 200 sleeping units — with the requirement that they expand to the 500-room requirement within five years of licensure.

“Through this bill, not only will we be able to encourage smaller developers to invest in Atlantic City, but we would also be able to encourage developers who are interested in a larger-scale development, but want to take it slow,” said Senator Whelan. “In this economic climate, finding developers willing and able to meet the 500-room threshold for a new casino is a very tall order. When you give developers the opportunity to invest in a smaller casino, and eventually expand when the economy rebounds, you’re more likely to get greater interest in the City.”

Senator Whelan noted that this bill would allow developers to redevelop abandoned properties along the Atlantic City Boardwalk which were once intended for much larger casino resorts. He said when the economy fell into recession, funding for many of these projects dried up. By opening up these abandoned properties to smaller-scale casino developers, Senator Whelan said the State would be able to immediately attract offers from outside developers.

“Right now, when you walk along the Atlantic City boardwalk, there are giant gaps between casinos,” said Senator Whelan. “Through this legislation, we can jump-start our construction and building industries and create new permanent jobs for local residents.”

Senator Whelan said the bill would also require small-scale and staged casino developers to invest five percent of their gross receipts into a State-managed fund in order to help them finance expansion projects. He said such a “rainy day” provision would allow casino developers to find new capital even during bleak economic times.

“We’re seeing progress in overcoming the effects of the national recession, but we need to be prepared should our economy find itself in trouble again,” said Senator Whelan. “Periods of economic growth and recession tend to be cyclical, and unless we want to gain in the boom years and abandon all hope for economic activity during the bust years, we need a tool to help casinos finance expansion, regardless of the state of the economy.”

Senator Whelan also introduced a secondary measure, which would allow the Casino Control Commission to determine whether or not to continue the 24-hours-a-day, seven-days-a-week monitoring of casinos in Atlantic City. The Senator said that the protections put in place during the early days of gaming in New Jersey may no longer be necessary, and by scaling back the Commission’s monitoring, the State may be able to save funds and encourage developers who would otherwise be uninterested in dealing with an overregulated gaming market.

“With advances in technology, the need for having a Casino Control Commission staffer in every casino, every minute of every day simply doesn’t apply anymore,” said Senator Whelan. “Rather than having the casino industry and the taxpayers of New Jersey pay for the staffing of unnecessary regulatory posts, we should be encouraging casino owners to re-invest in their casinos, to create a stronger draw for resort visitors. Taken with the smaller-scale casino development guidelines, a reasoned level of deregulation will boost existing casinos and encourage folks who couldn’t be bothered to try their luck in Atlantic City.”

Senator Whelan said both measures are likely to be referred to the State Government Committee.