With a mealy-mouthedness that is becoming all too familiar, Atlantic City casino operators took advantage of the Covid-19 pandemic to plead poverty, warning of “grave danger” to their businesses unless they got tax cuts yesterday. One of their arguments was they were losing business to Internet gambling (largely operated by themselves). But hey, it worked. Gov. Phil Murphy (D) told the Lege to give the casinos what they wanted—and it did. According to a new Pro Publica report, “under the changes, companies will collectively pay … $55 million less than they otherwise would have this year—cuts that will disproportionately impact Atlantic City, the distressed capital of the state’s gaming industry.”
But business rebounded dramatically. Whoops. In fact, it was on the comeback trail before the ink had even dried on Murphy’s signature. Casinos will bank a $767 million gross operating profit but pay only $110 million in taxes. Sweet for them. Asks former Casino Reinvestment Development Authority czar Jim Kennedy, “How do you do a tax decrease of that magnitude while they’re registering those kinds of profits on their books?” Atlantic City’s hard-pressed government will get only $95 million of those taxes instead of the $133 million it was anticipating. Atlantic County will also pocket $19 million less over the next five years.
Casino execs answered Pro Publica by pleading poverty and ongoing Covid-imposed hardship. Who are you going to believe, me or your lying eyes, they essentially asked. At least they were more forthright than Murphy, who ran and hid. Dispossessed power broker Stephen Sweeney stood by his unsubstantiated claim that four casinos would have closed without tax relief. Atlantic City residents were also betrayed by Mayor Marty Small (D), who asserted “We’re guaranteed to be in no worse position than any previous year.” Atlantic County Executive Dennis Levinson wrote to the governor, “It is confounding that the casinos can claim they are suffering while all reports indicate they are setting revenue records,” while Moody’s Investment Service added, “City management is not aware of any plans to close further casinos.”
What’s on the chopping block because of the tax cuts? According to Pro Publica, “opioid response, flu and COVID-19 vaccination initiative, and transportation services for senior citizens, disabled residents and veterans.” The county has successfully challenged the Payment in Lieu of Taxes program (PILOT) that’s at the root of the problem but the matter is far from resolved. And voices more skeptical than Sweeney’s are beginning to be heard in Trenton. “As more and more data started coming in on the health and vitality of the industry, it became clear to me that the idea the casinos were going to close was more talking point than truth,” opined state Sen. Troy Singleton (D). Let’s see how many casinos somehow find the megabucks to send the brass to Mayor Small’s pricey, Mary J. Blige-starring inaugural ball.
Still, by publicly wearing their hair shirt, casinos have backed themselves into a corner vis-a-vis the collective bargaining agreement with Unite-Here. Its May 31 expiry came and went without peace being made with Caesars Entertainment, MGM Resorts International and sundry other operators. As a consequence—and a warning shot across management’s bow—picketing began outside the Tropicana Atlantic City. No strike vote has been taken but Atlantic City customers are allergic to picket lines. Just ask Carl Icahn, who learned the hard way. Said Local 54 prexy Robert McDevitt, sounding like a man spoiling for a fight, “We have a long way to go before we get a contract. We’re not far enough down the road for me to give you any kind of a prediction yet.”
Like PILOT opponents, McDevitt is using those decade-best revenue numbers as a stick with which to beat Big Gaming over the head. Continuing to poor-mouth, casinos say they only get to keep 30% of booming online revenue. That’s a lot more than nothing. Casino are arguing that 2019 in-person wagering is the real metric to measure, even though that was before ‘Net betting. It’s an apples-and-oranges contention. The New Jersey casino dynamic has fundamentally changed and management needs to take that into account instead of trying to cheapskate its employees. Complained one Caesars Atlantic City worker, “We clean more check-outs each shift with less housekeepers. I’m working six days a week with mandatory overtime.” Ah yes, ‘El Diablo’ is in the house—and practically begging for trouble.
Meanwhile, one of the ostensible good guys—Hard Rock Atlantic City—has been caught trying to strong-arm the workforce over another flash-point issue: smoking. In an effort to tamp out dissent, Hard Rock management circulated a new media policy which requires employees to obtain bosses’ permission before speaking out in their capacity as Hard Rock workers. Move along, media, nothing to see. Of course, Hard Rock leadership will practice more circumspection as it lobbies the Lege for continued smoking, regardless of what it does to employees’ health. Double standard much?
Jottings: If you visited Las Vegas in April and thought you were paying more than ever for a hotel room, well, you were. Room rates hit their highest-ever level, averaging $177 a night. Major revenue drivers were BTS concerts (oh, those crazy kids) and the National Association of Broadcasters convention, as Las Vegas Strip occupancy hovered around 87% … May in Macao was 25% better for casinos than was April but that’s cold comfort for the sundry smaller businesses that are being dragged under by the gaming industry’s collapse. Even the Emperor Entertainment Hotel‘s casino has fallen victim to the economic malaise. “We are the most reliant city in the world on tourism. Of course, we didn’t have any other industries to fall back on,” lamented University of Macau academic Glenn McCartney. “Given that we didn’t diversify for 20 years, it isn’t going to happen tomorrow. There’s no quick fix.” … Kudos to Caesars Entertainment, which is helping employees repay student loans and underwriting scholarships. The program is confined to Nevada but it’s a heckuva good start … Elsewhere at Caesars, players are getting used to Bally’s Las Vegas and Paris-Las Vegas after decades at The Rio for the World Series of Poker. The shift means access to more restaurants, more tables (+33%) and—most importantly—more restrooms … To capitalize on Class III gaming, Four Winds Casino in Indiana is adding more casino space and a 23-story hotel. A convention center and event center are also part of the grand expansion.
Quote of the Day: “Most tourists are attracted by the local sights, monuments, and public buildings. But my Pappy used to say, ‘You can tell more about a town by looking at its gambling emporium than any other edifice.'”—Bart Maverick (the much-missed James Garner)
Bart Maverick was played by Jack Kelly, Brett Maverick was James Garner.