Atlantic City: Christie’s coup d’etat

Last week, I tried to work up a piece entitled, “Atlantic City, R.I.P.” After all, the Boardwalk had just come off a catastrophic June, impacted by table games in Delaware. Since table games were in process of sweeping Pennsylvania, from west to east, the demise of Atlantic City as a major casino capitol seemed a mere formality. Still, it was too damn depressing an obituary to tackle.

However, neither I nor practically anybody else figured on the massive spanner flung into the works by Gov. Chris Christie (R-N.J.) late yesterday. In one of the most breathtaking examples of government intervention one can recall offhand, Christie proposes to annex Atlantic City’s casino and entertainment district, putting it under the direct authority of his office. And that’s just for openers.

I dunno how “small government” Republicans will react to Christie’s putsch but it’s 1,000 times more ambitious than anything suggested by his predecessor, the relatively laissez-faire, perhaps even complacent Jon Corzine. Already predictable shrieks of “Bailout!” are being heard. (Who let Sharron Angle into the Garden State?) This power play is not without New Jersey precedent — albeit a sometimes unsuccessful one.

While saying that his ideas aren’t carved in stone, Christie got off to a good start by kicking two crutches out from under the state’s gimpy horseracing industry, presently running at a $22 million loss. Under his plan, the $30 million casino-derived subsidy would cease — money the casinos can keep for themselves  — and racinos are off the table. Also, the state-owned Meadowlands Racetrack would be either sold or closed, possibly repurposed as a NASCAR oval. Plus, with an extra 30 million clams back in their coffers, maybe some of Atlantic City’s worse-performing casinos can be taken off “Do not resuscitate” status.

Christie also proposes to pump as $175 million into the nearby Xanadu complex, a mastodonic project that’s been lumbering along for at least a good seven years now (and was nominated for casino gambling by predecessor James McGreevey). If he’s willing to do that, it’s high time to revisit the issue of tax abatements for new casino developments in Atlantic City. Christie was late to the party when that $300 Million Question was before the Lege. Then the intended beneficiary, Revel, itself became moot — but it remains crystal-clear that any significant new development along the Boardwalk on in the Marina District will require considerable incentives. Except for the mayoralty of n0w-state Sen. James Whelan, City Hall has taken a less-than-proactive stance for development, with collateral damage to the Boardwalk’s image.

Committing that worst of political crimes (telling the truth), Christie remarked that New Jersey “can no longer sustain the subsidy we give to the standardbred industry and the racetrack here.” S&G has been saying that the horseracing is economically dead on its feet and may have to go the way of the dodo. How refreshing to encounter a politician who will articulate that painful verity.

Christie’s proposed seizure of power over the casino district isn’t playing well …

The success of Christie’s agenda is contingent upon bipartisan support. However, the early reaction was squawking from the left. Two ideas that would hasten the demise of Atlantic City as we know it — “boutique” (i.e., locals) casinos and VLTs at Meadowlands — remain popular amongst the Democratic caucus. But the bossman’s hopping mad about the result of years of gridlock in A.C., uttering what could — and probably will, realistically — be the city’s epitaph: “Delay leads to demise.”

Nor will Christie get too many arguments when he damns A.C.’s “historically corrupt, ineffective, inefficient government.” The record speaks for itself. All too typical of the resistance he will encounter is the Boardwalk-based musician who moaned, “Atlantic City has issues, but it’s not in disaster mode where this type of takeover is necessary at this point.” What the hell planet are you living upon, dude?

Christie still must shepherd his plan through the Lege, risking much dilution and Christmas-tree adornment en route and his deadline is mid-2011, by which point casino revenues will have slid drastically farther. Democracy is slow and imperfect process — but better than every alternative, of course — something which may not work to Atlantic City’s benefit.
It’s not all good. Christie’s plan has several downsides. Sports betting is off the table. The Atlantic City Convention & Visitors Authority would be abolished. The governor would geld the New Jersey Casino Control Commission by making its regulatory oversight more like that exercised by the Nevada Gaming Control Board. Now, there are four inarguable facts about the paper tiger that is the NGCB: It’s understaffed, it’s underfunded, it’s beholden to “juice” and excessively deferential to “business as usual” (read: “turning a blind eye to seamy dealings and scummy licensees”). If the NJCCC were made over in the NGCB’s image, it would lower the bar for casino regulation in the United States from a hurdle to a small speed bump. It’s not a “modernization” but a return to antiquity.

“Unnecessarily adversarial” is key phrase. It’s a big, wet, sloppy kiss to “respected world-class operators” like MGM Resorts International … and Columbia Sussex. It also sounds suspiciously like code for, “We’ll look the other way if Gary Loveman wants to get into bed with Stanley Ho.”Also, as Schwartz points out, the city has few attractive options, considering that top gaming companies either give it a pass or — in the case of Penn National Gaming and Pinnacle Entertainment — have declared it not worth the risk, or worse.

On the other hand, when Christie talks about “attracting other world class operators to ownership of the eleven existing facilities,” we’re all ears, especially if it means expelling bottom feeders like Donald Trump, Colony Capital and Nick Ribis. “Increasing the meeting and convention business in the Atlantic City market by at least 30% per year for the next five years,” is a goal that should have been implemented long ago. The Boardwalk has struggled with the chicken-or-egg problem of not hosting enough major events for lack of critical mass of hotel rooms — but not having attendance that would justify building more hotels. They’ve been going ’round and ’round that mulberry bush for at least the past 12 years, probably longer.

Saying New Jersey spends 10X what Nevada does on casino regulation isn’t that damning a criticism when you consider that the Control Board and Nevada Gaming Commission have been starved for funds and staffing all the way back to the Gov. Bob Miller administration, with successors Kenny Guinn and Jim Gibbons proving no more generous (stingier, in fact, in Midnight Jim’s case).

Also, redirection of Casino Reinvestment Development Authority casino taxes back into Atlantic City is laudable in principle. However, it opens a Pandora’s boxful of problems for state programs already dependent on those dollars, many of which are targeted toward neighborhood revitalization across the state and assistance for the elderly. Where the revenue offsets will take place, Christie sayeth not. Perhaps New Jersey’s infirm and less-fortunate citizens will find themselves kicked to the curb.

UNLV Center for Gaming Research Director David G. Schwartz offers an excellent précis of the Christie-commissioned report and isn’t shy about pointing out its flaws. “You can’t legislate that you have to run your casino intelligently,” he waggishly notes, adding, “If they want to re-launch Mr. Peanut, I’m available for consultations.”

“You have to be bold. We are in difficult times and we have to turn this state around,” Christie said this morning. S&G agrees that the time for boldness is long past due. If Christie is closing the barn door after the horses have fled, it’s through little fault of his own. His huevos are even bigger than Donald Trump’s ego. Perhaps the governor is taking his cue from Frederick the Great: “L’audace, tourjours l’audace.”