EAST RUTHERFORD — Meadowlands Racetrack cannot survive long term without the addition of casino gambling, the track’s operator told an Assembly committee meeting Thursday.
“There are thousands and thousands of jobs that are going to disappear,” Jeff Gural told the Assembly Regulatory Oversight and Gaming Committee. “I can tell you that if everybody is worried about jobs in Atlantic City, better worry about jobs in horse racing because I cannot survive.”
Atlantic City has struggled amid increasing gambling competition from neighboring casino markets, which has resulted in slumping gambling tax revenues in New Jersey.
State Sen. Paul Sarlo, D-Bergen, said that gambling tax revenues have dropped from a high of about $500 million in 2006 to about $231 million this fiscal year. That was $16 million less than what officials had projected, Sarlo said. Next year’s projection is $287 million, he said.
“I don’t see where that number is going to come from,” Sarlo said.
Members of the horseracing industry who said they also are struggling to stay in business are among the biggest proponents of expanding casino gambling beyond Atlantic City.
Gural promised an annual tax revenue of about $350 million — offering to pay 55 percent in taxes on gambling revenue — the same tax rate Pennsylvania imposes on its casinos. Atlantic City casinos pay only 8 percent in gambling taxes. In Pennsylvania, the rate is 55 percent on slots and 16 percent on table games.
“I think that is significant, and I think it’s a game changer,” Assemblyman Ralph Caputo, D-Essex, said of the offer. “I’m elated.”
Gural also took the opportunity to criticize Atlantic City casino owners who in the past have opposed small increases in gambling taxes in New Jersey but also operate in Pennsylvania with little protest.
“In my religion it is called ‘chutzpah’ to sit here and tell anybody that they are going to be affected and the state of New Jersey is going to be affected because of the poor casino owner in Atlantic City,” he said.
Gural said a casino in the Meadowlands would compete only with those in New York.
“They have a huge advantage because they have a 40 percent lower tax rate,” Gural said of Atlantic City casinos.
Several researchers argued that most Central and North Jersey residents who gamble at Atlantic City would head to the Meadowlands.
“Atlantic City has not reached a point where its business model is such that it can withstand — based on our studies — in-state competition,” said Michael Pollock, of Linwood-based Spectrum Gaming Group.
Pollock also said allowing two different tax rates on casino gambling would create a conflict because that would mean a dollar waged at Atlantic City would bring less tax revenue than the same bet in the Meadowlands.
“That question at least should be considered, at least, answered,” he said.
Other advantages of Atlantic City casinos are the hotel and parking taxes being paid to the state as well as the hundreds of thousands of jobs supporting the adjoining tourism and hospitality industries in South Jersey. A casino in the Meadowlands would not include the creation of any hotels and many of the jobs also may go to New York residents, several speakers said.
“The concern I have most is what do we do moving forward by dropping a casino here where capital investment will be minimum?” asked Assemblyman John Amodeo, R-Atlantic. “What do we do for the overall picture of Atlantic City?”
Some of the jobs in Atlantic City would be lost regardless of whether gambling existed in the Meadowlands, said Steve Rittvo, chairman of the Innovation Group. The group has offices nationwide, including in Ventnor.
“Some of your facilities I believe may be threatened based on pieces that are happening in Pennsylvania and other places,” he said of Atlantic City. “The issue to me is, candidly, if you are going to lose some of those jobs, do I want to recapture them here.”
Dennis Drazin, the operator of Monmouth Park, was among several that urged lawmakers to make a move because getting a referendum to expand gambling may take a year or two, which would put the actual implementation in the Meadowlands several years away.
“We can’t afford to drag this out,” he said.
While the horseracing and casino industries have sparred over legalized gambling in the past, that debate had been largely resolved after the casinos agreed to give the racetracks millions for use on race purses if horseracing advocates agreed not to lobby for expanding casino gambling outside of Atlantic City.
That compromise has since been voided by Gov. Chris Christie, and the money that would have gone to horseracing was redirected to the creation of the Atlantic City Alliance for use in marketing the city as a destination resort. Now that the money no longer flows to horseracing, the prohibition against lobbying also ended.
South Jersey lawmakers argued that gambling at the Meadowlands would be to the detriment of Atlantic City.
The discussion, on its own, is causing uncertainty among investors interested in Atlantic City, said Assemblyman Chris Brown, R-Atlantic.
“You are causing uncertainty in the market,” he said. “It will only undercut efforts under way to reassert ourselves.”
Casino Association of New Jersey President Tony Rodio, chief executive officer of Tropicana Casino and Resort, was invited to speak at the hearing but was unable to attend.
Rodio said in an interview Wednesday that the state and casinos have invested millions into Atlantic City. Much of that commitment was made with a plan to spend the next five years trying to turn around sinking revenues and profitability in Atlantic City.
“You can’t be seven months into a five year plan and think about changing course,” Rodio said. “It just doesn’t make sense.”
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