Vol. 4, No. 8, August 2007
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Q&A with Linda Kassekert, New Jersey Casino Control Commission
Linda Kassekert, chairwoman of the New Jersey Casino Control Commission, was recently reappointed by New Jersey Governor Jon Corzine. Kassekert has had a tumultuous first term, culminating last summer in the state budget crisis, during which Atlantic City casinos were shut down for three days. She received kudos for her handling of the casino closings from all parties. In her second term, she faces a variety of issues from the licensing of Harrah’s Entertainment to the consideration of the MGM Mirage Macau deal with Pansy Ho, the daughter of casino magnate Stanley Ho. She spoke at her office in Atlantic City in June with Casino Connection Publisher Roger Gros. To hear the full version of this interview, visit www.casinoconnectionac.com and click on the podcast button.
Kassekert: The opening of Borgata, which was the first new casino in a number of years, and first casino to go completely coinless, occurred about six months into my term. After that we had probably the re-licensing of every casino here in Atlantic City, new acquisitions, the acquisition by Harrah’s of Caesars, the acquisition by Colony Capital of the Hilton, and the start of private equity firms coming into Atlantic City. And, of course, the shutdown last year was a large challenge.
What are some of the reasons you wanted to continue doing this for the next five years?
Well, I am really excited about where Atlantic City is right now. Although it has been a tough year with the competition in neighboring states, I really think we are poised to take the next big step. With Morgan Stanley and Revel Entertainment coming in, with Pinnacle, with hopefully other entities interested in Atlantic City, I think we are really right there with the construction of more hotel rooms that will make us more of a destination, increase the convention traffic… I think it’s a great time to be in Atlantic City.
Tell us about the state shutdown and how you and your staff handled it.
I was really pleased about the discussions that occurred when it looked like we were going to move toward a shutdown, and I presented information to the governor’s office. I sat down with all the directors of security and the councils of the casinos to talk about the timing. Obviously, we had a big concern about the July 4 holiday. They gave me the information I needed to go back to the governor’s office and suggest that we reconsider the date that we shut everything down. With July 4 weekend, millions of people were going to be down here and we didn’t want to incur any sort of panic in terms of leaving the city. We are an island here in Atlantic City, and that could have been problematic.
To his credit, the governor was very supportive of that and allowed us to wait until July 5, given those circumstances. That day, we closed the casinos at 8 a.m. We had our state police contingent from the Division of Gaming Enforcement on the ground. It was a very smooth closure. Nobody wanted to see this happen, but we really didn’t have a choice.
I am most proud of our ability to reopen the casinos within an hour of the governor signing the executive order reopening the state. My staff really rose to the occasion. I had inspectors who were on call and were ready at a moment’s notice as soon as the order was signed.
What kind of cooperation did you get from the casinos first for the closure and then second for the opening?
We had a lot of cooperation. As I said, it was a tough time for everyone. There are a lot of people in the casino industry who frankly depended on that paycheck. We developed a very good working relationship with the various CEOs, and I think they knew that as soon as things were resolved we were going to get them open.
Do you believe that CCC and DGE employees should be considered “essential,” thereby insulating the casino industry from subsequent shutdowns?
I think that, in whatever fashion, it is important that there be some sort of remedy to this. I understand there is some concern about some of those bills with respect to meeting constitutional muster but I know that the governor has said publicly that he wants to see the issue resolved. I think that between all of us putting our heads together, we can come up with a solution.
Regarding your second term, let’s start with the MGM Mirage application for approval of its partnership with Pansy Ho, the daughter of Macau casino baron Stanley Ho. What are some of the issues that you’ll be looking at in those hearings?
We are not sure when that is going to happen. We have not received the Division of Gaming Enforcement’s report, so it’s a little premature for me to comment on it. I think we will do as we have always done—we will look at what the division says, the commissioners will examine the issue very carefully and we’ll make that determination.
The role of private equity groups is another big issue—what will be your focus when Harrah’s Entertainment comes before the board for approval of its acquisition by two firms, Apollo Management and Texas Pacific?
Obviously, we have to take the Casino Control Act and the standards that are in them and apply them to a very different sort of financing. We’ve had experience with Colony (buying Resorts and Hilton) and with Columbia Sussex (Tropicana), but this is going to be a much bigger proposition. It is really going to be a balancing act. The private equity companies have a different perspective on how they manage companies, so obviously we are going to be looking at that. But I really don’t see it as a problem. I think the established standards will be applied to the process.
Columbia Sussex took control of the Tropicana earlier this year. Since that time, they’ve fired more than 15 percent of the staff. Some officials are very upset and accuse the company of gutting the casino employment base. What role does the CCC play in this kind of situation?
Our role extends strictly to the gaming floor. Part of our requirements under the act is that we must collect the gross revenue tax, and if there are any issues with respect to the collection of that tax or issues with respect to the reporting of tax, that is where our concern comes in. So we are limited in terms of our areas of review, but we work with the Division of Gaming Enforcement, and if there are issues with respect to the collection of that tax and the gaming floor itself, we will be active in that process.
There is no standard for the number of employees that are required to work a gaming floor per square foot, is there?
There are not. They have to be able to meet the requirements under the act in terms of the collection of taxes, reporting, variances and the like, and that is what we will focus on.
Another employment issue that has been facing the AC casinos is the attempt by several unions to organize casino floor workers, primarily dealers. Do unions need to be licensed? If not, what kind of oversight do you have on those organizations?
There are certain licensing requirements that a union must satisfy in terms of filing with us and providing information. I am not sure what the status of UAW is right now, but I am assuming they are filing the appropriate paperwork.
Are they permitted to begin negotiations on a contract before they get a license?
Yes, and I think that falls under the National Labor Relations Act.
A lot of people say the New Jersey regulatory process is a gold standard in the industry because it really made gaming legitimate in the eyes of politicians and Wall Street. Do you feel a responsibility to uphold that reputation?
I absolutely do. I think we have set the standard. When you look at the states and the countries that have adopted similar statutes to ours, I think it points to the fact that New Jersey really led the way on this issue.
