North Jersey casinos may do well, but NYC competition looms

This undated illustration provided by Meadowlands Racetrack and Hard Rock International shows what the proposed Hard Rock Casino Meadowlands in East Rutherford would look like. The project is one of two casinos proposed for northern New Jersey if voters pass a referendum in November on expanding casino gambling beyond Atlantic City. 

Meadowlands Racetrack/Hard Rock International via AP

State lawmakers are set to vote on putting a North Jersey casino question on the November ballot despite unanswered questions over taxes, potential revenue and Atlantic City’s future.

The Assembly Judiciary Committee on Monday held the second of two required public hearings on the proposed constitutional amendment, which would end Atlantic City’s intrastate gambling monopoly. The amendment would allow two new gaming halls to open in separate counties at least 72 miles from Atlantic City.

The bill must be approved by three-fifths majorities in both houses of the Legislature, something that could happen as soon as next week. Then voters would decide in a referendum whether to expand gambling in the state.

But there are unanswered questions, including the tax rate for the new casinos and who would receive the tax revenue earmarked for helping Atlantic City.

Proponents of North Jersey casinos say the new gaming halls will revive the state’s gambling industry by recapturing revenues lost to other states. The bill also promises no more than one-third of tax revenue generated from the new casinos would go to a nonprofit charged with redeveloping Atlantic City. That nonprofit has not been named.

Without a specific tax rate, it’s unclear how much money would go toward the resort. Assemblyman Ralph Caputo, D-Essex, said the tax rate will be specified in the enabling legislation, but he guessed it would be somewhere between 40 and 60 percent. Atlantic City casinos pay an effective tax rate of 9.25 percent on gross gambling revenue.

“This is a game-changing proposal for New Jersey taxpayers,” Caputo said in a statement after the hearing. “We would modernize our gaming industry and provide significant relief for senior citizens and disabled residents. It’s truly a win for everyone.”

Local elected and business leaders urged lawmakers to hold off on voting on the bill until more questions are answered. Questions were raised over the tax rate, the amount of revenue North Jersey casinos would generate, who would receive the Atlantic City redevelopment money and how that money would be used.

“The families in Atlantic County have a right to have these questions answered,” said Assemblyman Chris Brown, R-Atlantic. “Atlantic County has been the goose that laid the golden egg, and that goose has been choked.”

New Jersey Policy Perspective President Gordon MacInnes agreed, asking: “Why rush?”

“The committee, the Legislature, the public does not have the other information required to make a sensible judgment about ACR-1,” he said, referring to the bill number.

Carl Icahn was also brought up. Icahn said last week he would withhold his planned $100 million investment into the Trump Taj Mahal Casino Resort if casinos are allowed to open elsewhere in the state.

“Doesn’t that just prove my point, that the uncertainty in the market is what’s been holding Atlantic City back?” Brown asked.

Caputo described Icahn’s remark as a threat, adding “I don’t think the committee should respond to threats.”

“He’s a big boy,” Caputo said. “When he assumed ownership of the Taj, he had no agreement with the people of the state of New Jersey.”

Others to testify against North Jersey casinos included Joe Kelly, president of the Greater Atlantic City Chamber, and Debra DiLorenzo, president of the Chamber of Commerce Southern New Jersey.

DiLorenzo, a Longport resident, provided a spreadsheet showing that the Atlantic City gambling industry lost $400 million when the casinos first opened in Pennsylvania and Delaware in 2007. Those new casinos, she noted, were all at least 72 miles away from Atlantic City — the same radius in the amendment that’s supposed to protect Atlantic City.

“All three of the casinos built in 2007 are at least the same distance as the casinos called for in ACR-1 — 72 miles from Atlantic City — and the impact was truly undeniable,” DiLorenzo said.

Contact: 609-272-7215

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