Closing Tables on Graveyard? That is Simply Unacceptable!

In the gaming industry, regulation does more than control the gaming activities; regulation also limits and defines legal gaming and the nature of a casino. Las Vegas and Atlantic City casinos are byproducts of each state’s gaming regulations.  The size and scope of the Las Vegas Strip would not have been possible with New Jersey regulations; Atlantic City could never have developed an east coast version of the famous Strip because of the regulatory restrictions. New Jersey’s regulations are in part the reason that Atlantic City is so much more vulnerable to competition than the Las Vegas Strip.

New Jersey’s regulation produced cookie-cutter properties, each one with exactly the same amenities, products and services and each of those amenities, products and services received regulatory approval.  While on the other hand, the Las Vegas Strip is legendary for its variety.  Nevada gaming regulation, has over the last 60 years, given operators the freedom to develop and provide the services customers demand.

Granted that freedom has led to some pretty tacky innovations on the Strip and even some that are morally questionable.  For example, the pool day-clubs, the dance-clubs and some of the nightclub entertainment constantly push the limits of both taste and morality.  But until the casinos do something that breaks the law, they are free to experiment.  Casinos in Las Vegas do occasionally fail.  Some dreams of developers turn out to be pipe dreams.  But it is the market forces that determine the successes and failures, not the regulators.

As a general rule, regulators aren’t innovators and they aren’t business people.  Instead, regulators are conservative, rule following and law enforcing people.  Gaming does need regulation and it needs those skills sets to regulate it.  But they are not the best skills sets to evaluate business ideas, as happens in Atlantic City even after the Christie remake of the regulation.  At this point in the development of the Atlantic City casino industry things have pretty much gone past the point where changes in regulation can make a big difference.  The die has been cast.

Atlantic City is facing a wall of competition; exciting, brand new, billion-dollar casinos are being built all over Atlantic City’s traditional feeder markets.  While new regulation cannot do much to help the Boardwalk casinos, old regulation can still make things harder, as it did this week. Trump Plaza is at the bottom of the market in Atlantic City and probably nothing short of a bull dozer will ultimately solve its woes. Trump management is trying to stem the tide of red ink. It is trying to cut expenses the way casinos have done for years when faced with radically declining revenues, the change of seasons and a mountain of debt.  It is no secret to anyone who has worked in a casino that the late night-early morning hours – the graveyard shift – has the least number of customers and gaming revenue.

The graveyard difficulties are worst for the casinos at the bottom. It is not uncommon for casinos in that position to consider closing some of the games, restaurants and other facilities during those hours. Some casinos even close completely on graveyard because revenues are never enough to cover expenses.  Trump Plaza has reached that point; revenues on graveyard in the table game pit have dropped so low that it cannot cover expenses. So, not surprisingly, Trump would like to close the games for a few hours.  However, the gaming regulators in their wisdom denied the request and determined the request “unacceptable” and besides no other casino in Atlantic City had ever requested such an outlandish thing.

New Jersey gambling regulators Monday rejected a request by Atlantic City’s Trump Plaza Hotel and Casino to scale back its table game operations during the normally slower morning hours. Trump Plaza had wanted to close its table games from 4 a.m. to 10 a.m. on weekdays, according to the state Division of Gaming Enforcement.  “After a full discussion, it was determined that the request was unacceptable,” division spokeswoman Lisa Spengler said…Spengler said Trump Plaza has been the only Atlantic City casino to ask the division’s permission to cut back on its table game operations…Earlier this month, the Trump casinos announced they were laying off a total of 200 employees. Donald Wittkowski, Press of Atlantic City, 9-17-13

Coincidentally, there is a convention of franchisees in Atlantic City this week focusing on regulation; it is not the gaming industry doing the complaining, but the story sounds familiar.  Dunkin Donut-ers are convening in Atlantic City to discuss the challenges of selling coffee and donuts in today’s highly competitive coffee-selling environment.  Arun Mandi, a franchisee, had an interesting comment on the challenges he faces.  He said, “Competition has become a smaller part of our discussion lately.  It’s just across-the-board regulations we’re faced with, whether it’s caloric content being posted on the menu boards, the minimum-wage increase, the Affordable Care Act or paid sick leave.”

Dunkin’ Donuts franchise owner Arun Mandi, of Voorhees, said he faces daily competition for the roadside coffee choices of New Jersey’s traveling public. But when franchise owners from across the country meet today in Atlantic City, he suspects they will spend more time talking about pending or proposed regulations. “Competition has become a smaller part of our discussion lately,” Mandi said. “It’s just across-the-board regulations we’re faced with, whether it’s caloric content being posted on the menu boards, the minimum-wage increase, the Affordable Care Act or paid sick leave.” Michael Miller, Press of Atlantic City, 9-17-13

Of course, the regulations in gaming are very different from those faced by fast-food franchises.  However, the weight of the regulation is equivalent; excessive regulation sometimes makes it impossible to operate a business properly.  Any business needs to be able to decide some basic things for itself and operating hours is one of those basics.  Depriving Trump of the ability to cut its expenses only hastens its end.  Certainly the Donald and his style, arrogance and debt are the root causes of the failure of Trump properties in Atlantic City. But regulation has helped set the stage for the demise of Trump.  Even the Las Vegas Strip casinos would be struggling under the pressure of the competition that Atlantic City is facing.

However, the Strip casinos would be better competitors than their Atlantic City counterparts. The Strip casinos would be better because they are product of a less restrictive regulatory structure; the Nevada structure allowed the casinos to develop as the market dictated. While the Atlantic City casinos developed as the regulators dictated and even in 2013 they have to ask the regulators for permission to open or close a blackjack table.


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