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Whelan 200-Room Casino Bill Approved In Senate

Bill Would Allow for Smaller Casinos to Energize Gaming Economy in Atlantic City

TRENTON – A bill sponsored by Senator Jim Whelan which would make Atlantic City’s casino industry more competitive by creating a pilot program to allow smaller, boutique casinos to redevelop blighted areas within the resort was approved by the Senate today by a vote of 32-2.

“The casino industry in Atlantic City is the economic life-blood of the entire South Jersey region, and we have to do whatever we can to keep this industry competitive,” said Senator Whelan, D-Atlantic, and chairman of the Senate State Government, Wagering, Tourism and Historic Preservation Committee. “Unfortunately, neighboring states in recent years have seen the success of gaming, and expanded operations right across the border to draw away some of our client base. If the casino industry in Atlantic City is to remain vibrant and productive, we have to be open to offering a gaming experience that gamblers can’t get anywhere else on the East Coast, if not the country.”

The bill, S-1866, would authorize the State’s Casino Control Commission to create a pilot program to offer two new classifications 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 would have not more than 24,000 square feet of casino space and not less than 200 qualified sleeping units.

Developers would also have the option of building a staged casino facility with not more than 34,000 square feet of casino space, and not less than 200 sleeping units – with the requirement that they expand to the 500-room requirement within five years of licensure. For every 100 rooms over 200 that is added, a staged facility would be able to increase their casino space by 10,000 square feet, for a maximum of 54,000 square feet before they hit the 500-room capacity mark. If the casino does not meet the 500-room expansion deadline within five years, it would see its casino space reduced.

Under the pilot program, one small-scale casino facility would be licensed, and one staged casino facility would be licensed.

The bill would also allow both the small-scale and staged facility licensee to have 10,000 additional square feet of casino space if they construct 40,000 square feet of special amenities. Under the bill, “special amenities” are defined as unique museum and/or exhibit spaces, sports and entertainment attractions, spa and treatment facilities, or themed retail, dining or entertainment space. Special amenities would not include casino space, standard restaurant or retail space, or meeting and convention space.

“More states are competing for fewer and fewer gaming dollars during this difficult economy,” said Senator Whelan. “Atlantic City has to stand out with new products and unique entertainment opportunities if we’re going to continue to be the economic engine of South Jersey. This bill provides incentives for casino developers to get creative in the amenities they provide, and to push the envelope on the facilities they build.”

Senator Whelan noted that this bill would allow developers to redevelop abandoned properties along the Atlantic City Boardwalk which, despite being valuable oceanfront property, have never been developed in the first place. 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.

“When we introduced this bill earlier this year, Hard Rock announced plans to invest in a phased-in casino project in the resort,” said Senator Whelan. “During the current economic crisis, it’s next to impossible for casino developers to come up with the multi-billion dollar investment to create a true mega-resort in Atlantic City. But if we can lower the investment threshold, we will see more investors like Hard Rock come out of the woodwork and invest private capital into Atlantic City.”

“We’re incredibly excited about this opportunity to invest in the Atlantic City market,” said Jim Allen, Chairman of Hard Rock International. “We look forward to the legislative process moving forward. We’d like to thank Senator Whelan for sponsoring this forward-thinking bill, and Senate President (Stephen M.) Sweeney for putting it up for a vote.”

Senator Whelan noted that both types of licenses would require a two million dollar application fee on the part of the developer that would be deposited with the State Treasurer. The first million dollars would be a cash deposit or letter of credit to the State, and would act as a guarantee that the facility would be built – these funds would be returned to the developer on the completion of the project. The second million would be non-refundable and would be put toward infrastructure improvements that are related to the project by Atlantic City.

Senator Whelan said the bill would also require small-scale and staged casino developers to invest an amount equal to 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’ve seen larger projects die on the vine because investment capital dried up, and no one is willing to take a chance during a difficult economic period,” said Senator Whelan. “Not only does this bill lower the investment threshold to get new casinos in to redevelop blighted areas in Atlantic City, but it creates a safety net so that development capital is available in good times and bad, and a guarantee that construction actually takes place. We want to see these projects brought to fruition, and the rainy-day and guarantee provisions in this bill ensure that the funds will be there, no matter what.”

The bill now heads to the Assembly for consideration before going to the Governor to be signed into law.

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