North Jersey Casinos

New Jersey legislators are putting to public vote a referendum to allow casinos in the northern part of the state including one at Meadowlands Racing and Entertainment in East Rutherford pictured, Tuesday, Dec, 15, 2015.

Michael Ein / Staff Photographer

A bill that would ask voters to approve up to two North Jersey casinos took a step forward on Monday.

The Assembly Judiciary Committee released a proposed constitutional amendment to end Atlantic City’s state gambling monopoly and allow casinos to open in the northern part of the state. The bill passed the committee by a 5-2 vote.

The vote fell along party lines. Republican Assemblymen Erik Peterson, R-Hunterdon, Somerset, Warren, and Chris Brown, who is not normally on the Judiciary Committee but was put there Monday because of his public opposition to North Jersey casinos, voted against the bill.

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Brown, R-Atlantic, sparred with Assemblyman Ralph Caputo, one of the bill’s sponsors, for nearly half an hour over the legislation. Brown argued the bill should be held until the tax rate the new casinos will pay on their gambling revenue is specified.

Under the bill, up to one-third of the tax revenue will go toward redeveloping Atlantic City for 15 years starting in the second fiscal year after the bill’s enactment. But until a tax rate is specified, it’s unclear how much money would go toward helping the resort, where four casinos closed in 2014.

Atlantic City casinos currently pay an effective tax rate of 9.25 percent on gross gambling revenue. By comparison, Pennsylvania casinos pay an effective tax rate of 55 percent.

“If we’re supposed to have an intelligent debate and an intelligent conversation about amending the constitution, why wouldn’t we be honest with people and tell then what the tax rate is going to be so they know exactly what they’re voting on?” Brown said.

Caputo, D-Essex, said the tax rate will be included in the enabling legislation and should be determined before voters decide on new casinos in November. He said passing the amendment itself was about “not blocking the voters’ right, even if they’re against it or for it, to make that decision” on allowing new casinos.

Legislative leaders have not committed to setting a tax rate before the vote. Senate President Steve Sweeney said he wants to get the referendum bill passed before worrying about the details of the enabling legislation.

“Let's get this one first,” Sweeney, D-Gloucester, Cumberland, said Monday. “There will be a discussion either before, or it could be after, but most important is getting the question passed.”

The amendment also doesn't specify the locations of the new casinos, but says they must be at least 72 miles away from Atlantic City and be in separate counties.

Proponents of North Jersey casinos say the new gaming halls will prevent New Jersey from losing gambling revenue to New York casinos set to open in coming years. Atlantic City's gambling industry has halved over the last nine years, from $5.2 billion in 2006 to $2.7 billion in 2015.

But Brown cited studies that say Atlantic City will lose $500 million in gaming revenue if there are North Jersey casinos, possibly offsetting any revenue gains from the new casinos.

“If we accept Deutsche Bank’s estimate that North Jersey casinos will generate $500 million in gaming revenue, even in an oversaturated market, the state sees no net gain by expanding gaming,” Brown said.

The bill also sets a minimum $1 billion investment in each new casino. It also gives Atlantic City casino operators just 60 days to apply for one of the two new licenses. After that, any company could apply for a license.

The Senate version of the bill passed the Senate Budget and Appropriations Committee in January. There still must be public hearings on the bill. Then it will have to pass both the Senate and Assembly with three-fifths majorities to be placed on the November 2016 ballot.

Then voters would decide on Election Day whether to approve the amendment.

The Associated Press contributed to this report

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