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Whelan Casino Reform Bills Approved

Bills Would Allow for Smaller Casinos, Curb Over-Regulation

TRENTON – A bill package sponsored by Senate State Government, Wagering, Tourism and Historic Preservation Committee Chairman Jim Whelan, which would make Atlantic City’s casino industry more competitive by introducing smaller casinos and scaling back over-regulation of the industry, was approved by the Committee today.

“The casino industry in Atlantic City is an economic engine not just for the resort, but the entire South Jersey region,” said Senator Whelan, D-Atlantic. “We owe it to the people of South Jersey to do everything we can to support this industry and maintain Atlantic City as the gaming capital of the Northeast. Providing new gaming products, like smaller boutique casinos, and easing draconian regulations and oversight will go a long way to keeping Atlantic City’s casinos economically viable.”

The first bill in the package, S-1866, which was approved by a vote of 5-0, 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.

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.

“The key to Atlantic City’s future viability is in offering gaming experiences that are unique and unlike anything else offered by other casinos in neighboring states,” said Senator Whelan. “This bill encourages new investment in Atlantic City, and creates economic incentives for casino investors to be creative in the amenities they offer.”

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.

“After I introduced this legislation in March, Hard Rock announced plans to build a boutique casino on the Boardwalk,” said Senator Whelan. “With the state of the economy right now, Atlantic City simply cannot attract the sort of investors who can take a risk on a mega-resort in the same vein as the Borgata or some of the older casinos. This bill would allow investors to phase-in their investment in Atlantic City, and will hopefully attract greater interest from gaming vendors who were hit hard by the global recession.”

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.

“The global economic downturn has had a devastating impact on gaming in Atlantic City and elsewhere,” said Senator Whelan. “Multi-billion dollar construction projects have been halted mid-construction as funds dried up. This bill creates a ‘rainy-day fund’ as an insurance policy to make sure casino investors can find funding in lean economic times.”

Senator Whelan’s second bill, S-1867, which was approved by a vote of 5-0, 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, remote monitoring of casino activities has become a cost-effective alternative to stationing a Casino Control Commission staffer in every casino in the City,” said Senator Whelan. “The 24-hours-a-day, seven-days-a-week monitoring and over-regulation 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. Easing draconian over-regulation of the casino industry will save much-needed State resources, and will hopefully encourage new investment in Atlantic City’s future.”

Both bills now head to the full Senate for consideration.

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