Vol. 5, No. 4, April 2008
RSS Feeds
A Vital To-Do List
Common-sense solutions for a brighter future in Atlantic City
Our industry is at a critical juncture. On one hand, the future is bright, with billions of dollars in investments over the next several years, and billions more planned over a slightly longer time frame. These investments will transform Atlantic City into a true destination resort, the capital of East Coast gaming and entertainment.
At the same time, our industry faces some serious economic challenges. Last year we experienced the first revenue decline in our 29-year history, primarily due to competition from Philadelphia racinos. In the midst of these struggles, our industry has been asked to provide a $90 million subsidy to the horse racing industry over the next three years.
At this juncture of short-term difficulties and long-term success, the Casino Association of New Jersey believes it’s imperative for our state’s elected leaders to ensure that this incredible opportunity to take Atlantic City to a higher level is not squandered.
We suggest the development and implementation of a comprehensive strategic plan that, in the short term, helps the casino industry regain its momentum in the face of the current challenges. The long-term objective is to maintain a stable economic and regulatory environment to spur the continued investment we need to reinvigorate our industry.
We suggest several legislative initiatives to jump-start this process:
Tax Incentives. To help the industry address the current challenges, legislation was conceived that would allow licensed casino operators to take a tax deduction for certain promotional gaming offers or cash offers that we provide to our customers to encourage increased visitation to our casinos, particularly now that they have other options.
Currently, we are required to pay the 8 percent gross gaming revenue tax on these offers, even though they’re only promotional credits to our customers. Other gaming jurisdictions, notably Nevada, Pennsylvania, Delaware, Mississippi and Michigan, do not tax these credits in this way. This change will permit us to market more aggressively, particularly to customers we’ve lost to Pennsylvania.
OTW facilities. We also support legislation that would require the expeditious build-out of horse race off-track wagering facilities throughout the state. In 2001, New Jersey lawmakers enacted legislation that permitted 15 OTWs here. Last year, two of these facilities were finally opened and are reportedly doing quite well.
Until New Jersey horse racing takes full advantage of the tremendous opportunity presented to it by this legislature seven years ago, the horse racing industry will not have a sustainable revenue base to support its survival. We suggest that the OTW bill be put on the fast track, given the dire circumstances surrounding the horse race industry and the almost immediate benefits it achieves from these facilities. Our industry will have provided $176 million over a seven-year period by the time the horse race subsidies expire in 2011. With that in mind, we believe this legislation is critical.
Non-closure legislation. With the possibility of another budget impasse, the importance of this legislation cannot be underestimated. Even if there’s not another state shutdown, the mere threat of a budget impasse will likely alter the plans that our customers make for this upcoming July Fourth holiday.
Creation of an independent Atlantic City Convention Center and Tourism Authority. There is pending legislation that would separate the Atlantic City Convention & Visitors Authority from the New Jersey Sports and Exposition Authority. This is advisable, given that the AC market is large enough to justify an independent agency to focus solely on attracting visitors and tourists to our region.
Regulatory Reform. We advocate a comprehensive review and updating of the Casino Control Act and related regulations. The New Jersey regulatory system is one of the most comprehensive in the United States, and we would never support any change that would adversely impact the integrity of the oversight process. Still, the regulatory system needs to remain current to properly reflect operating practices and transparencies that exist in today’s business and financial worlds.
CRDA. Like our industry, the Casino Reinvestment Development Authority is at a crossroads. This is an appropriate time to revisit its mission, its priorities and its policies to ensure optimal support for the gaming industry and the state of New Jersey as a whole.
While we’re in a temporary slump, our industry is undoubtedly on the verge of breaking through to the next level and beyond. We believe it is incumbent upon our industry and government at all levels to do what is necessary to ensure that this potential becomes reality.
