Dangerous roll of the dice on casino control in New Jersey

Dangerous roll of the dice on casino control in New Jersey

By Carl Zeitz

The enactment of the Casino Control Act, following the November 1976 passage of the constitutional amendment that legalized casinos, was the result of a thorough, 18-month public review. Now, without warning, it is doomsday for casino regulation in New Jersey.
In the package of major pending legislation to reinvigorate New Jersey’s principal private gambling industries, horse racing and casinos, one bill stands out for its incoherent surrender of the New Jersey casino regulatory system.

Senate measure S-12 does not simply seek further revisions in a series of amendments to the New Jersey Casino Control Act, as has been done in major omnibus reform legislation a half-dozen times since its enactment in 1977. In its 250 amendments, the bill guts the law and blows up a system recognized worldwide as the gold standard of casino regulation, which has three fundamental purposes:

• Determine the good character, honesty and integrity of everyone who owns, operates, finances, invests in, works for and sells to casinos to predict honest conduct, including the payment of all taxes due to the state;

• Verify and follow every dollar invested in casinos, the largest of all cash retail businesses, and track every dollar that leaves a casino as tax payments, salaries and benefit, returns on investment, payments to vendors, interest expenses, and payments and transfers to related companies;

• Assure gambling games on which the public wagers have uniform, clear rules, fair odds and honest management and operation.

The bill obliterates these public purposes. It destroys New Jersey’s dual agency regulatory check and balance, and eviscerates the Casino Control Commission. The bill turns over most CCC administrative, financial, auditing, rule-making and regulatory powers and duties to the Division of Gaming Enforcement, which is a zealous police agency but not a policy, fiscal or judicial organization, and upends more than 30 years of casino regulatory knowledge and experience.

For example:

• There will no longer be licensing for non-gaming casino service industries, the vendors who sell most kinds of goods and services to casinos, ignoring the reason for such licensing — in the bad old days in Nevada, casino vendors were a main pathway for organized crime, whereas similar attempts here were prevented by vendor licensing.

• There will no longer be casino employee licensing. Casino employees who deal the games, maintain and service slot machines, count the money, work the cashier counters or man the surveillance cameras or casino security will no longer be licensed, no longer be examined for honesty, integrity and good character. They’ll just all be trusted to be honest in an industry that, in Atlantic City, each year handles more than $30 billion in wagers and tallies more than $10 billion in cash in its count rooms. Thirty years of regulatory experience informs us that you can’t just trust everyone with all that money. You have to investigate and license them.

• Casinos, at the start licensed annually but now just every five years, will be excused from relicensing. In New Jersey, you have to renew an automobile driver’s license every four years, but you will never again have to renew a casino license if S-12 passes.

• Casino inspectors, who must be in the count rooms to assure an honest accounting of tax revenue and otherwise assist the public, will be gone. It was in the count rooms of bygone Las Vegas that, unwitnessed, organized crime extracted its criminal skimming of casino revenue.

• Five streams of taxes and fees paid by casinos, and now collected and audited by one experienced agency — the CCC — will be fractured, with collection and auditing assigned to four different agencies.

These are but five among 250 changes that will wreck New Jersey casino regulation and sink public trust in an honest game and honest tax collection.

Our casino regulators are not the foe of casinos and their executives. They are vouchers for their honesty. There is not a better personal recommendation than to be licensed by New Jersey. Then, why this legislation? Who is the source?

This is not deregulation, but abandonment of regulation — the one public element that has worked effectively and consistently in Atlantic City since 1978.

Carl Zeitz served as a member of the Casino Control Commission from 1980 to 1988. Now a public relations consultant, he has represented casino industry clients.