Vol. 4, No. 11, November 2007
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Q&A with Joe Corbo
Joe Corbo, President, Casino Association of New Jersey
Joe Corbo is senior vice president and general counsel for the Borgata Hotel, Casino and Spa in Atlantic City and president of the Casino Association of New Jersey. Corbo has been president of the Casino Association of New Jersey for the past three years. During that time, he dealt with the state shutdown of the Atlantic City casinos in July 2006, as well as the smoking regulations imposed by the City Council of Atlantic City. He addresses how the association dealt with those issue and others coming up, including a subsidy for state racetracks, increasing regional competition and employee participation in an upcoming election. He spoke with Casino Connection Publisher Roger Gros from his offices in Atlantic City in late September. To hear a full podcast of this interview, go to www.casinoconnectionac.com.
Casino Connection: The Casino Association of New Jersey has been somewhat dysfunctional during its 20-plus year history. Tell us the status of the organization now.
Corbo: I am not sure I would say dysfunctional but I would certainly say that there have been some time periods in the past where competitive issues have caused a lack of unity, and unity, of course, is critical to our message. The last time period when all Atlantic City casinos were not CANJ members was a few years back when the Trump organization was not involved. However approximately two years ago Trump came back on board so CANJ now includes all 11 casinos within Atlantic City that are owned by five casino companies. As such we are now fully aligned and unified.
Do you believe New Jersey residents understand the positive impacts of casinos on the state? Do senior citizens understand that it’s casino taxes that pay for their prescriptions?
No, I really don’t. I think that the people from this region have a better understanding of this but I don’t even think they fully understand it. And as you get geographically further away from Atlantic City there is less and less understanding.
One statistic that I throw out there that opens people’s eyes is that the gaming revenue that is generated by the 11 Atlantic City casinos is equal to that which is generated by the 24 largest casinos on the Las Vegas Strip. People are astonished by that fact. One of the struggles that we have is letting people throughout the entire state know that our industry benefits them. Yes, it has a larger benefit to the southern portion of the state because we are truly the economic engine of this region, but if you look statewide you are correct in pointing out the PADD program is a huge success. The 8 percent gross gaming revenue tax is over $400 million a year right now, which goes directly to fund that program which primarily funds the prescription drug program for seniors and disabled citizens throughout the state.
The other thing that benefits the entire state, we also pay a 1.25 percent tax to the Casino Reinvestment Development Authority and, by law, a certain percentage of those funds have to go to redevelopment projects that benefit the entire state. Another huge benefit is the volume of goods and services we purchase from New Jersey vendors in all 21 New Jersey counties. For instance, last year we expended $2.2 billion with these New Jersey vendors. Among other things, that generates thousands of jobs with those vendors throughout the state. One of the general objectives of the casino association is to get the word out of all the positives that are generated by our industry and we need to do a better job of doing that.
One of the big impacts the state has had on the industry was the casino shutdown in July of ’06 after a budget impasse forced the state to lay off non-crucial workers. That situation still has not been rectified. Has CANJ been working on that?
We absolutely are pursuing this issue although, realistically, we understand that this will not be addressed until, at the earliest, after the upcoming elections for the entire legislature are concluded in November. Until those elections occur, we won’t get any legislation on that will assist us in that regard, but it is one of our priorities to get that legislation enacted. We can’t have a repeat of what happened a year-and-a-half ago in July. It impacted our customers; it impacted our employees who lost wages and tips that they will never recoup during a very busy time. It obviously impacted our business and it also impacts the way the business climate of the state.
When you see a private industry such as ours that is shut down in that manner, it doesn’t send a good message about the business climate. It doesn’t send a good message to the casino community as a whole that is looking to invest billions of dollars in our state. So, we certainly will put that on the top of our list once these elections are over because the fiscal situation in the state hasn’t improved, in fact reports are that it is getting worse. When it comes budget time next year at the end of June and early July, we can’t have the threat of another shutdown hanging over us because our customers are going to remember it. They will make other plans just in case another shutdown happens in New Jersey, and we can’t let that happen.
There’s been a lot of speculation within the state racing industry about possibly renewing the arrangement in which the casino industry contributed $63 million to subsidize racing purses. Let’s start with the money you’ve already contributed. Do you know or understand how they used that money?
No, we don’t unfortunately. And the reason we don’t is that under the agreement that we entered into three years ago, the money was supposed to be placed into a segregated interest-bearing account. For some reason this was not done. As I understand it from the accountants that I have spoken to, it is impossible to independently audit those funds given that they were not put into a segregated account. So we truly don’t know where the money went. That’s not to say that the money wasn’t used exactly how it was required to be used. We are just saying that because that requirement of the agreement to put the funds into a segregated account was not adhered to we can’t really tell you where the funds have gone.
Are you currently having discussions with them on this issue?
Not as of yet and I don’t know that we will ever speak directly to the horseracing people. But there are several misconceptions that are out there. In your question you asked me about $63 million we contributed. That is the amount we have contributed up to this point. The actual deal is a four-year deal that was entered into three years ago which calls for $86 million to subsidize horseracing, and for that our industry receives a moratorium that precludes placing slot machines at the Meadowlands racetrack, or anywhere else in New Jersey other than Atlantic City. The final payment of that $86 million, which is $23 million, is due on October 15. From our perspective— it was a four-year agreement since the consideration that we received was the moratorium on slot machines through December 31, 2008. As such, we don’t really see a particular rush to sit down and discuss this right now because the agreement has more than a year to go.
There’s an election coming up in November with some very important legislative seats up for grabs. CANJ doesn’t and can’t endorse candidates, but you would like to see all casino executives and employees vote. How would you suggest they prepare for their votes?
Not that it is necessarily for me to say but if somebody asked me that question as you just did I would advise them to decide what issues are important to them and study how the candidates will deal with those issues and vote accordingly. If an employee decides that issues that could impact our industry or their workplace are important to them and therefore could impact their jobs, they should take those concerns into account and vote accordingly. Study the issues and make the right decision based on what your individual desires are.
Why is it important for all casino employees, executives and their families to vote?
As an American, first and foremost, I believe that it’s everybody’s civic duty as a citizen of this country to vote. It is one of the primary foundations on which our great country was founded upon. Looking at it as an industry, we’ve got roughly 40,000 to 45,000 employees and if you multiply that by a spouse or a significant other and family members I think its pretty easy to get up to half-a-million people or more who are directly impacted by policy decisions that impact our industry. If those issues are important to those workers and their families, that is a sizable voting block and it could have an impact on how those candidates view our industry as a whole if they get elected.
Do you think casino employees and executives should be able to participate in Atlantic City and state politics the same as any other citizen of New Jersey?
Absolutely. Any time that you can increase the pool of qualified candidates that is a good thing and we think that there are certain of our employees who would be very well qualified to hold office. Some people believe that the casino employees’ inability to seek public office renders them second-class citizens and we don’t think that they deserve that connotation.
There is also a school of thought that the casino industry could possibly dominate politics in Atlantic City, is that something that you disagree with?
I disagree with it. I assume that that was one of the concerns back in the late ’70s when casinos first came to Atlantic City but, just as the regulations and our industry has matured, I don’t think this is a valid concern at this point. There were a whole different set of circumstances back then. There were concerns with organized crime being a part of casinos. People now understand that the men and women who are employees of casinos are good, upstanding citizens and they deserve the same rights that an employee of any other company has in order to run for office.
