New Jersey Gov. Chris Christie is urging state Assembly leaders to approve his plan to take over Atlantic City’s finances amid warnings that increased competition could reduce AC’s struggling casino industry to just three operators.
Last week, AC mayor Don Guardian warned that he would shut down non-essential government services by April 8 after failing to convince Christie to approve a short-term cash injection. On Monday, Christie urged Assembly Speaker Vincent Prieto to stop stalling on allowing legislators to vote on a state takeover of AC’s finances, which would provide bailout funds subject to certain conditions.
Among those conditions is a provision that would let the state void public sector union contracts. Prieto wants this provision excised before he’ll allow a vote but Christie has vowed to veto any alterations of his proposal. A Prieto spokesman slammed the governor’s “juvenile gamesmanship” in playing with AC’s survival in order to achieve an ideological goal.
Much of AC’s current woes stem from the decline of tax revenue from its principal industry. The city lost four of its dozen casinos in 2014 and some of the survivors – most notably, the Borgata – have won hefty tax refunds from the city based on their depreciating valuation.
Further closures are expected if state voters approve a November referendum on allowing two new casinos in the northern half of the state. While an as yet unspecified portion of these new casinos’ tax revenue would be diverted to help offset AC’s decline, many of the current operators expect the added competition – not just in north Jersey but from new casinos set to open in New York and other adjacent states – could cause anywhere from three to five more AC closures.
Deutsche Bank analyst Andrew Zarnett has speculated that three AC casinos could close as a result of the new competition. Zarnett fingered the struggling Trump Taj Mahal as the most likely candidate for closure while Caesars, Bally’s and Resorts Atlantic City were teetering on the precipice.
Resorts CEO Mark Giammantonio appeared to echo Zarnett’s concerns on Monday, telling a St. Peter’s University forum that the “domino effect” of extra competition would result in “a billion dollars” leaving the AC casino market, a point by which Giammantonio believes there will be “no turning back.”
Last week, Borgata CEO Tom Ballance suggested that “between a third and a half” of the north Jersey casino revenue will come directly at AC’s expense, which would result in “probably three, maybe four” AC closures.
Ballance noted that, as one of the few AC casinos that is financially thriving, he had a “somewhat neutral perspective” on the prospect of further casino casualties, but nonetheless called the prospect of allowing more in-state competition “bad policy.”