Voters in New Jersey are Facing a Tough Choice

The nation is heading into the final phase of the campaign season.  Everything up to this point has been child’s play compared to what we will see in September and October. Trump and Clinton are lining up their forces, finalizing policies and preparing to debate. In the meantime, they are on tour making speeches and trying to make friends.  The majority of us will not see or hear them speak, except during the televised debates.  What the majority of us will experience is incredible noise and distraction created by hundreds of millions of dollars of advertising.  Prepare yourself; we will get no respite until the votes are counted.

At the same time, the residents of New Jersey will be besieged with advertising on another subject: To casino or not to casino?  It will be a very difficult choice for many voters and the advertising rhetoric is not likely to make the choice any easier. Of course, the amount of money spent on billboards, radio and television in New Jersey will be minuscule compared to presidential spending, but in New Jersey it will still be significant.  It is also likely to be the most hotly contested ballot issue in memory.

The ad war over North Jersey casinos is underway. Groups that support or oppose expanding gambling in the state outside Atlantic City recently launched ad campaigns… “New York and Pennsylvania have stolen billions of our gaming revenue, robbing us of dollars to fund programs like Meals-on-Wheels and the property tax freeze,” a woman says in the ad. “Vote yes and support gaming expansion in Northern New Jersey to protect our seniors.” Christian Hetrick, Press of Atlantic City, 8-15-16

The stakes are high for the citizens of the Garden State and even higher for those with a horse in the race. The proponents believe it is a chance to get back some of the gaming revenue, jobs and taxes lost to other states over the last two decades.  The politicians in favor of more casinos in the state see Atlantic City as a lost cause.  They think a couple of casinos on the border with New York could regain the lost tax revenues. Of course, the operator of the Meadowlands Racetrack sees this as chance to get rich.  The proponents cite jobs, tax revenues and an overall economic boost from two new casinos that will at least partially replace everything that has been lost in the last nine years since casinos started opening in Pennsylvania.  And no one would deny that competition from other states has a painful impact on the economy in Atlantic City and to a lesser degree on the state of New Jersey.

The opposition takes no issue with the claims that jobs and taxes have been lost. But, it makes a completely different argument – more casinos in the state will not create a net gain.  Instead, new casinos would take much of their revenue from the existing casinos in the Boardwalk city and further reduce jobs and tax revenues in the state.  In a best case scenario, additional casinos would be nails in the coffins of two or three casinos in Atlantic City.  In the worst case they would sound the death knell for all of the casinos in Atlantic City.  In that scenario Atlantic City would slide back to the city that hosted the Democrat convention in 1964; it was that dismal and embarrassing city that eventually lead to the casino legislation that created the Atlantic City of the last thirty-eight years.

Millions of dollars will be spent trying to convince the voters to believe those arguments.  The casinos in Atlantic City are staunchly against the plan; clearly more casinos in the state would not be good for the existing ones.  They have picked up some interesting allies including Monmouth Park racetrack in Oceanport, Genting Resorts in Queens and New York trade unions. Monmouth Park wants a larger share of the revenues than Meadowlands is offering.  The New York casino doesn’t want any more competition than is already on its way and the unions have only a conditional objection; they want the right to organize the workers in any new casino.

A major New York union and the operator of a Queens casino are anteing up against a New Jersey referendum to allow gambling outside of Atlantic City. The New York Hotel and Motel Trades Council will begin running a television and digital ad campaign against the referendum. Kenneth Lovett, New York Daily News, 8-15-16

The casinos also have strong support from local government.  Atlantic City is already in dire straits and its problems are directly related to the issues facing the casinos.  If casino revenue declines the city’s taxes decline, when casinos close the city loses tax revenue.  And one more casino, the Taj Mahal has said it will close in October.

A $73 million state loan could come with many conditions for this city, including dissolving its water authority by next month.  The city must first use redirected casino tax funds included in a state recovery bill to pay back the state…But if those funds aren’t enough, the state could collect proceeds from a Bader Field sale; the assets of a dissolved Municipal Utilities Authority; any state aid received by the city; and a portion of casino payments in lieu of taxes. Christian Hetrick, 8-2-16

When a celebrity owner hosted a lavish opening of Trump Taj Mahal Casino Resort in 1990, it made huge news well beyond the city. And with the current owners’ announcement they plan to close, it was a big deal all over again. Martin DeAngelis, 8-4-16

Atlantic City is on a downward spiral that reflects the casino revenue trajectory.  The government is embattled, bankruptcy and a threatened state-takeover are howling at the door.  The government grew its services and expenses with the growth of the city’s casino industry for thirty years, and now it is desperately trying to shrink itself to fit the size of its revenues; it is a vicious cycle that is not likely to be broken soon.  More casinos in the state would exacerbate the problem.

Will there be layoffs at cash-strapped City Hall? “To be determined,” Mayor Don Guardian told workers last week.  Christian Hetrick, 8-10-16

It is easy to understand why the casinos and the city and the casino in Queens oppose additional casinos.  And it is easy to see why Meadowlands would like to become a casino.  But the political proponents of adding more casinos are not easy to understand.  The governor, the assembly speaker and the president of the senate all support it. Especially confusing is Governor Chris Christie. Just a few years ago he was Atlantic City’s champion.  He promised to stand by the city, to make operating a casino less expensive and more profitable.  He helped the stalled Revel get enough money to finish construction and open. He was there during Hurricane Sandy.  In every crisis Christie could be counted as a supporter of the city and its primary industry.  But now Christie has joined those who think the future of casinos in New Jersey does not lie on the Boardwalk, but in the meadows in the shadow of New York City.

A group that backs building casinos in North Jersey has formally entered the campaign, and its supporters include some of the biggest names in state politics… The top two names in that first group are state Senate President Steve Sweeney and Assembly Speaker Vincent Prieto. Other powerful political backers include state Sens. Ray Lesniak and Joseph Kyrillos. Martin DeAngelis, 8-5-16

Gov. Chris Christie says he will cast his ballot this November in favor of expanding casinos to northern New Jersey.  The governor also said he would campaign for the ballot question if asked. Nicholas Huba, 8-16-16

Maybe I should not be surprised; politicians can be a fickle lot who change their minds often.  Christie’s Atlantic City attitude reversal is so extreme it makes one wonder if it is related to his failed presidential bid.  Would he be in favor of expanding gaming outside of Atlantic City if he had gotten the presidential nomination or been chosen as Trump’s running mate?  We will never know, but we do know he is putting as much effort into undercutting the casino industry in Atlantic City as he once did to protect it

In the next couple of months, the issue will be debated at length and with much heat; lots of money will be spent by both sides.  At the moment, in the language of the bookies, it is a “pick’em.”  Even with the governor and the leaders of both houses coming out in favor of expansion, the measure is not guaranteed to succeed. In fact, polls show the measure down by a few points.

In the national election, people have become very, very polarized.  Republicans and Democrats alike are declaring that this is a do-or-die time for the nation; neither side has an unblemished candidate and that allows each to predict a national disaster if their opponent is elected.  I am not certain that I agree, but I do think this is a do-or-die election for the casino industry in Atlantic City.  If the voters authorize two more casinos in the state, Atlantic City will continue its long decline and in time become a tiny, unimportant remnant of its former self.  There are approximately eleven more casinos entering the northeastern market, all of which will impact Atlantic City.  But none will do more damage than a casino at the Meadowlands.  Some voters in New Jersey will be faced with a tough choice in November.  But for those with a vested interest in Atlantic City and its casinos, voting “No” should be an easy decision to make.



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