Judge: PokerStars can't buy Atlantic Club casino

Judge: PokerStars can't buy Atlantic Club casino
By Bloomberg NewsThe Star-Ledger
on May 18, 2013

PokerStars was denied its request to keep alive a $15 million offer to purchase the Atlantic Club Casino Hotel in Atlantic City, New Jersey.

A judge ruled yesterday in Atlantic County Superior Court against PokerStars, the world’s largest online poker site. PokerStars had agreed in December to buy the former Atlantic City Hilton as a foothold into the U.S. online gambling market. A New Jersey online gambling bill enacted on Feb. 26 requires operators to have a physical presence in the state.

Colony Capital LLC, which controls the property, declined to extend the contract with PokerStars when it expired last month, according to a court filing. PokerStars, the largest online poker site in the world, is a division of Isle of Man- based Rational Group Ltd.

Eric Hollreiser, a spokesman for PokerStars, and Cathleen Kiernan, a spokeswoman for the Atlantic Club, confirmed the judge’s decision. Rational attorney Wayne Positan didn’t immediately return a call seeking comment.

Colony had difficulty selling the casino because of $30 million in unfunded pension liabilities and declining gambling in Atlantic City, according to a PokerStars lawsuit. The buyer agreed to fund operating shortfalls of as much as $750,000 a week until the deal closed.

Deal Terminated
Through those payments, Rational had put out $11 million, according to the complaint. Owners, led by Colony, terminated the deal on April 26, and have asked for the remaining $4 million of the purchase price as a termination fee, according to the complaint.

Rational said it believes Colony Capital terminated the agreement so it could sell the property for a higher price after New Jersey enacted its gambling legislation in February.

“We are reviewing today’s ruling,” Hollreiser said in an e-mailed statement yesterday. “We remain committed to New Jersey and to contributing to its economy.”

The U.S. casino industry opposes the PokerStars effort to buy the Atlantic City property. The American Gaming Association’s protest to state regulators focuses on PokerStars’ prosecution last year for bank fraud and money laundering.

“We are pleased that the New Jersey court has dissolved the restraints it entered on May 6,” Atlantic Club Chief Operating Officer Michael Frawley said in an e-mailed statement. “We are now free to build on the tremendous opportunity provided by online gaming.”

PokerStars reached an agreement with the U.S. Justice Department in July 2012, settling charges related to the company’s offering of online poker in this country.

The case is Rational Group US Holdings Inc. v. Resorts International Holdings, ATL-C-43-13, Superior Court of New Jersey, Atlantic County (Mays Landing).

http://www.nj.com/business/index.ssf/2013/05/pokerstars_bid_to_buy_atlantic.html

New Jersey's Desperation

In their desperation, will New Jersey approve a bargain regardless of questions?

Howard Stutz writes the weekly column

Inside Gaming, reflecting what is

happening in the industry.

 

PokerStars potential purchase of Atlantic City casino offers many questions

Posted by Howard Stutz
Friday, Dec. 07, 2012

 

The idea that online gaming giant PokerStars would buy the struggling Atlantic Club Hotel-Casino in Atlantic City brings additional intrigue into the ongoing Internet gambling legalization debate.

The Wall Street Journal reported Thursday that PokerStars is negotiating to purchase the Boardwalk property from private equity group Colony Capital for less than $50 million.

This part is not a surprise. For that price, acquiring the casino – originally built by Steve Wynn in the 1980s as the Golden Nugget and most recently operated as the Atlantic City Hilton – is practically a steal.

One question, however, supersedes all others. Can PokerStars – which agreed to pay $731 million to the federal government in August to settle a nine-count criminal indictment – actually gain licensing approval from the ultra-strict New Jersey gaming regulators?

And, if PokerStars, which is based in Isle of Man, were to pull off this transaction, might the company attempt a similar move in Nevada?

Legal sources Friday confirmed the Wall Street Journal report and said PokerStars attorneys have spent time recently in New Jersey.

According to the newspaper, the deal hinges on New Jersey legalizing online gaming in the state where a bill is currently under debate in the legislature. If approved, gamblers would only be able to access the websites from within New Jersey’s borders and the websites would be operated by Atlantic City casinos.

PokerStars resolved its legal troubles with the U.S. Department of Justice on Aug. 1. The charges were part of the federal government’s April 15, 2011 crackdown on Internet poker in the U.S. The company and its founders were named in a nine-count indictment and were accused of bank fraud, money laundering and running an illegal gaming business.

PokerStars agreed to pay the $731 million settlement but didn’t admit to any of the allegations listed by government prosecutors. The company is also not prohibited from re-entering the U.S. gambling market. However, the PokerStars’ founder, Isai Scheinberg, remains under indictment on the various charges, has not entered the U.S., and hasn’t been arrested. The settlement called for Scheinberg to step down from any management duties with the company, which is now run by his son.

New Jersey gaming regulators all but kicked MGM Resorts International out of Atlantic City in 2010. The Division of Gaming Enforcement decided Hong Kong businesswoman Pansy Ho, MGM Resorts’ joint venture partner in Macau, was unsuitable. The ruling was primarily due to her ties with her father, controversial billionaire Stanley Ho, whose Macau casinos are alleged by international law enforcement to under the influence of Chinese organized crime triads.

Pansy Ho has never been accused of wrongdoing, nor has she ever paid a multimillion dollar fine to settle a government indictment. Pansy Ho’s business ties with MGM Resorts were also deemed suitable by gaming regulators in Nevada and Mississippi.

Fast forward two years and in Atlantic City, where gaming revenues have declined 38 percent between 2006 and 2011 and continue to fall in 2012, state regulators might be willing to take a chance on PokerStars.

A spokeswoman for New Jersey’s Division of Gaming Enforcement told the Wall Street Journal that a “rigorous investigation” would be conducted of any license applicant, including PokerStars.

That brings us back to Nevada.

Interactive gaming regulations are already in place for online poker and state regulators have licensed some 16 casino operators and technology providers. The first online poker site could go live by the spring.

Like New Jersey, Nevada’s regulations only allow companies with a traditional land-based casino to operate a website, which can only be utilized by gamblers physically located within the state’s boarders.

Is PokerStars shopping for a potentially low-priced casino in Reno or other parts of the state?

That move would continue to add more fascination to the ongoing online gaming legalization debate.

 

http://www.lvrj.com/blogs/stutz/PokerStars_potential_purchase_of_Atlantic_City_casino_.html?ref=361

Bailing Out Casinos

Does Massachusetts want to spend previous taxpayer dollars bailing out wealthy Gambling Developers because they have saturated the market???

When you suck discretionary income from the local economy, do you believe it is limitless?

Taxpayers Face Bailout Of Casino Industry Says The Counter Media

PR Web

Las Vegas, Nevada (PRWEB) November 19, 2012

American taxpayers are faced with a huge bailout of the casino industry according to a soon to be released White Paper, says thecountermedia.com. The report is scheduled to be released January 2, 2013. The report sights that the casino industry has all the elements that led to the auto and Wall Street bailouts such as high debt, a heavily saturated market, and no national policy on how the industry is ran. An Associated Press report in September of this year validates the study's conclusions, and sites that the bailout has already began in Atlantic City (http://www.businessweek.com/ap/2012-09-24/poll-keep-casinos-only-in-ac-no-state-tax-breaks). A CBS news report dated September 16, 2011 gives details of the beginning of the taxpayer bailout scheme with the rescue of the Atlantic City Hilton (known as the ACH) to the tune $24 million.

The report also points out that 2 of the top 4 casino companies, MGM, and Caesars are over $33 billion in debt and according to 3rd quarter earnings reports lost a combined $650 million plus (http://calvinayre.com/2012/11/12/casino/can-mgm-and-caesars-outrun-their-debt/). Wall Street analysts have noted that both corporations have seen their stock plummet since the 2008 recession with MGM closing at $9 a share, and Caesars closing at $5. The report cites that due to the mirror circumstances that led to collapse of the Motor City auto industry and Wall Street banks, it is inevitable that the casino industry must be bailed out or allowed to collapse, causing an even more devastating economic disaster. This is in large part due to the fact that Las Vegas and Nevada depend on the casino industry as their economic golden goose, with MGM being the state's largest employer at 50,000 jobs and declining.

The model of depending on casinos as an economic cure all has been adopted by dozens of states, who also face the same collapse as the main Vegas players go under. The report examines Las Vegas, Atlantic City, and the states that have adopted casinos in order to create jobs and add tax revenue to the local coffers. Michigan is used a prominent example of the perilous situation tax payers find themselves in. Michigan approved 3 Las Vegas style casinos in Detroit in the late 1990's in an attempt to rescue its economy from years of stagnation. 15 year later Detroit and Michigan have seen a devastating rise in unemployment, crime, and loss of businesses in site. Michigan like Nevada, Mississippi, New Jersey, California, and other casino saturated states are at the top of America's jobless list according to the Bureau of Labor Statistics (http://www.bls.gov/web/laus/laumstrk.htm). Most of these states have doubled down on opening more casinos, which Michigan looking at opening 15 additional gambling dens on top of the 23 that already exist. Statistics also show that casinos cause more jobs than they create. Casinos create 4,000 jobs per billion dollars spent, as opposed to small business which create 29,000 jobs, and infrastructure projects creating nearly 50,000 per billions spent

(http://www.politifact.com/ohio/statements/2011/oct/26/steve-latourette/us-rep-steve-latourette-says-infrastructure-invest/).

The report reaches the conclusion that it is an economic impossibility for casinos to bring in revenues or patronage that would end the downward spiral to industry collapse. Due to the ready availability of casinos in cities from coast to coast gamblers will not bear the expense of airfare and lodging to travel to either Atlantic City or Las Vegas in significant numbers. The report also sites that both politicians and casino moguls have also reached that conclusion are seeking to open new markets in cities like Toronto, Canada, ban additional casinos in Atlantic City, and out of desperation Las Vegas mayor Carolyn Goodman is calling for the legalization of prostitution, marijuana, and transferring the porn industry from Los Angeles to Sin City (http://www.8newsnow.com/story/17243086/game-changer-legalizing-prostitution-marijuana-pornography-filming). The most startling conclusion of the report is that if the issue isn't addressed in early 2013, entire states will face bankruptcy due to the staggering number of municipalities that will fail due to the casino industry collapse. This will result in the country suffering another economic recession on par with the disaster of 2008.

Read the full story at http://www.prweb.com/releases/2012/11/prweb10142359.htm

 

http://www.equities.com/news/headline-story?dt=2012-11-19&val=727773&cat=business#.UKrG7dPsTg0.facebook

Atlantic City Tropicana anti-union tactics

Atlantic City Tropicana casino says contract negotiations are at impasse; Local 54 says not so
By DONALD WITTKOWSKI Staff Writer pressofAtlanticCity.com

ATLANTIC CITY — Tropicana Casino and Resort has declared an impasse in contract talks with the gaming industry’s largest labor union and vowed to implement its “last and final offer” with or without the union’s approval.

Tony Rodio, Tropicana’s president and chief executive officer, said Friday they are deadlocked in a dispute over payments to an employee pension plan. Tropicana wants to give workers the option of taking a lump-sum cash payment or have that same money deposited into a 401k plan instead of continuing with the current pension system.

The existing pension benefits accrued by current and retired Tropicana employees over the past 30 years remain intact and would not be affected by the company’s proposal to change the retirement payments in the future, Rodio said.

However, Bob McDevitt, president of Local 54 of UNITE-HERE, said there is no impasse and that the union stands ready to continue negotiations. He also maintained that Tropicana is trying to “scare” employees into accepting a contract that has unfavorable terms.

“We’re not going to allow Tropicana to misrepresent the facts here,” McDevitt said. “That’s clearly what they’re trying to do.”

McDevitt said the union likely would file complaints with the National Labor Relations Board and the courts to have a ruling on Tropicana’s threat to unilaterally impose contract terms by the end of February.

“They’re trying to rush to implement their proposal because they’re trying to bully the employees,” McDevitt said.

In the meantime, Rodio noted that Tropicana is preparing for the possibility of a strike, should the union take that route. But McDevitt said no strike or any other type of union action is planned at this time.

“There’s nothing planned, a strike or a job issue,” he said. “If they want to dispute this, we’ll go to court.”

McDevitt characterized Tropicana’s version of the dispute as “fantasyland.” He said the union has offered to resume negotiations, giving two open dates for later this month.

Rodio said Local 54 has not responded to emails and phone calls since the last face-to-face bargaining session on Dec. 5. But on Friday, McDevitt released a copy of a Jan. 31 letter that he sent to a Tropicana attorney discussing the contract negotiations at length, including the union’s belief that there is no impasse. The letter also says that the union would be available for negotiations on Feb. 18 or Feb. 25, or both.

About 1,000 Local 54 employees work at Tropicana. Rodio said letters were mailed Friday to those employees notifying them of the contract dispute and of Tropicana’s intention to implement its own terms, including the new plan for pension payments.

“I think this is a much better option for our employees,” he said. “The fact that Local 54 has chosen not to even enter into negotiations with us, frankly, is unfair to us and the employees.”

Over the union’s objections, Tropicana wants to withdraw from a pension plan with the National Retirement Fund, saying it is plagued by a $1.4 billion deficit and in critical condition. The federal government’s national plan to rehabilitate that fund calls for “significantly decreasing benefits for employees and significantly increasing hourly contributions by employers,” Rodio said.

“I can’t project the future of that fund. If that deficit continues to grow, everyone’s benefits are affected,” Rodio said.

Rodio asserted that Tropicana was absolved of any underfunded pension liabilities connected to the National Retirement Fund when the casino was purchased out of bankruptcy in March 2010 by billionaire investor Carl Icahn.

Tropicana continued to pay into the existing pension system while contract negotiations continued with Local 54, Rodio said.

McDevitt said that Tropicana wants to avoid its pension obligations by paying employees only a fraction of their retirement benefits and shifting all of the risks to the workers.

“They seem to think it’s OK to disturb the retirement pension of the workers,” McDevitt said.

Tropicana is among four casinos that still have not reached a new contract agreement with Local 54 since the old pact expired in September. The others are Resorts Casino Hotel, the Golden Nugget Atlantic City and ACH, formerly known as the Atlantic City Hilton Casino Resort. Local 54 represents about 14,000 bartenders, cocktail servers, cooks, housekeepers and other service workers at Atlantic City’s 11 casino hotels.

Rodio said Tropicana’s proposed terms are virtually identical to the contracts that Local 54 negotiated earlier with the two Trump casinos, except for the new pension payments.

Desperation in Atlantic City

ACH casino counting on new locally focused marketing strategy to survive in Atlantic City
By DONALD WITTKOWSKI, Staff Writer pressofAtlanticCity.com

ATLANTIC CITY - Ghostly quiet - that's how the ACH casino floor appeared at 12:30 p.m. on a recent Wednesday. Row after row of slot machines were empty.

Michael Frawley admitted that the stillness made him nervous. Casinos, after all, are not libraries. The gaming floor is supposed to be boisterous and raucous, filled with gamblers.

But Frawley, ACH's chief operating officer, also viewed the hushed surroundings as an opportunity - a clean palette of sorts - to try to revitalize Atlantic City's second-smallest casino.

"We're going to create a niche in this market that's never been explored," he said.

The troubled gaming hall is being rebranded as a "locals" casino in a last-ditch attempt to save it in Atlantic City's shaky market. ACH, formerly known as the Atlantic City Hilton Casino Resort, will also go through yet another name change to fit its new identity. The new name will be revealed sometime soon.

ACH, in pursuing the locals strategy, will concentrate on attracting gamblers who live within a 35-mile radius of Atlantic City, a very tight customer base. But far more than geography is involved. Frawley explained that the casino will also adopt a new image as a "value-oriented" property.

"Price point is a deciding factor in where you're going to go," he said of customers. "This is a place where you don't come on a special occasion. You come here because it's Thursday. It's just a better deal."

ACH will slash restaurant prices by 50 percent. Penny slot machines will dominate the casino floor. The number of table games will be reduced from 86 to 50 and those that remain will feature low-limit stakes, Frawley said.

In December, New Jersey casino regulators approved gambling chips worth just 25 and 50 cents apiece for ACH. Chips of $1 or higher are commonly used at the Atlantic City casinos. Frawley said minimum table game bets will be as low as $2 or $3, with the 25- and 50-cent chips giving players different wagering options.

Slots machines, though, will really define the casino's low-budget strategy. Plans call for removing 920 old slot machines and replacing them with 600 new ones that feature the latest technology. Most of the new slots will be penny machines. When the overhaul is finished, ACH will have a total of 1,500 slot machines compared with 1,850 now.

"Our goal is to have the best slots product in Atlantic City," Frawley said. "We are a slots-centric property. We consider slots to be our core product."

ACH's rebranding follows a tumultuous year in which it lost the rights to use the iconic Hilton name and narrowly avoided a foreclosure sale by lenders. Hilton Hotels & Resorts ended its franchise agreement with the casino for the Hilton brand, but did not divulge the reason for doing so.

ACH has nearly completed removing all vestiges of the Hilton name and corporate logo from the property. Next comes a rebranding for a casino that has had a series of name changes associated with its revolving door of ownership over the years. It originally opened as the luxurious Golden Nugget in 1980 under Las Vegas gaming mogul Steve Wynn's ownership.

Hilton's ownership began in 1996, followed by other deals that ended with the California-based private investment firm Colony Capital LLC taking charge of the casino in April 2005. Colony kept the Hilton name through a marketing partnership with the hotel chain.

Under Colony, the then-Hilton defaulted on its mortgage in July 2009, prompting lenders to seek court permission to foreclose on the property. The litigation was put on hold early in 2011 while attempts were made to sell the casino. With no buyers emerging, Colony reached an agreement with lenders in November to continue as the casino's owner while pumping in $24.3 million in new cash. The deal also commits Colony to keeping ACH open at least through Oct. 31.

Frawley made no guarantees about the casino beyond that date. He acknowledged the possibility that the casino could close down. When the final figures are in for 2011, he estimated that ACH will lose between $19 million and $20 million for the year. Those losses underscore just how difficult it will be to revive the casino in a gaming market mired in a five-year revenue slump.

"To say it's not going to be easy is an understatement," Frawley said. "I'm optimistic, but I'm not deluded to think that it's going to be an easy road by any means."

Michael Pollock, a casino analyst and managing director of the Linwood-based Spectrum Gaming Group, noted that ACH will face additional pressure from the grand opening this spring of the $2.4 billion Revel casino. Revel is expected to steal business from not only the weak Atlantic City properties such as ACH, but even the powerhouse Borgata Hotel Casino & Spa.

"There's always that risk," Pollock said of the possibility of ACH closing. "There's always that risk in any year, particularly when a new property is going to come on line and from Day One that it will be a market leader."

Pollock praised ACH and Frawley for overhauling the casino's marketing strategy, but added that competitors will be quick to copy the "locals" theme to woo customers to their place, provided it works.

"If you can properly identify the niche, there is every reason to expect that competitors will try to emulate that strategy if it proves to be profitable," he said.

At stake are ACH's nearly 2,000 jobs. The New Jersey Casino Control Commission endorsed the deal between Colony and its lenders to preserve those jobs. The day after the commission gave its regulatory approval in November, ACH announced 150 job cuts.

ACH must reduce its labor costs if it is to remain open, Frawley stressed. He said that managers have taken an undisclosed pay cut and that concessions are being sought from nonunion employees.

"On the union side, we're looking for everyone to help as much as they can," Frawley said, declining to discuss possible pay cuts for union workers.

Customers agree that ACH needs changes, but the idea of a low-budget casino scares some and offends others. They fear the casino will lose its cozy atmosphere.

"I don't approve of it," said Barbara Hart, of Waretown, Ocean County. "I think it will attract a lower element of people."

Murray and Gloria Harper, of Monroe Township, Middlesex County, made similar comments. Murray, 87, and Gloria, 77, are retired teachers who started coming to ACH, during its Hilton days, for education conventions.

"What is the class of the people coming off the street?" Gloria Harper asked of the new customers ACH will court. "But at the same time, there could be some pluses. Maybe it will open it up to more people."

The Harpers visited ACH on a Wednesday in December to celebrate their 13th wedding anniversary. They were astonished to learn that all of the casino's restaurants were closed that day.

"We came to celebrate our anniversary and not one damn restaurant is open," Murray Harper complained.

In 2010, a $20 million renovation project added four new restaurants and gave the gaming floor a partial facelift. Frawley said about $14 million to $15 million in fresh cash from Colony Capital will be used for further upgrades to the casino floor. The remainder of the money gets tucked away for operating expenses.

In addition to new slot machines, there will be new carpeting, new lighting, new seating and more space for customers to move around in. The casino's opulent chandeliers and barrel-vaulted mirrored ceilings trimmed in gold-hued glass will stay, though.

Also staying put at ACH are Colony Capital and its partner Nicholas L. Ribis, who serves as the casino's chief executive officer. Colony and Ribis once were the owners of Resorts Casino Hotel, before lenders took over that property in 2009 when it defaulted on its mortgage. The lenders sold Resorts in December 2010 for $31.5 million to Atlantic City gaming executive Dennis Gomes and New York real estate magnate Morris Bailey.

"Nick always liked the property even, frankly, more than he liked Resorts," Ribis' spokesman, Alan Marcus, said of ACH. "He fought very hard to keep control of the property."

Ribis, a veteran Atlantic City gaming executive, came up with the concept of having a locals-oriented casino about 20 years ago, Marcus maintained.

Now that strategy will be tested as ACH fights for survival.

"Nick has always said that a gambler from Atlantic City is just as valuable as a gambler from Detroit," Marcus said.

Union strikes deal with four A.C. casinos

Details not released --

Union strikes deal with four A.C. casinos
Written by WAYNE PARRY Associated Press

ATLANTIC CITY — The likelihood of a strike in the nation’s second-largest gambling market receded on Friday as the city’s main casino workers’ union reached a tentative agreement with Atlantic City’s largest casino company, Caesars Entertainment Inc.

Local 54 of the Unite-HERE union reached the three-year deal with the company’s four Atlantic City casinos: Caesars Atlantic City, Bally’s Atlantic City, Harrah’s Resort Atlantic City and the Showboat Casino Hotel.

Both sides said terms wouldn’t be released until after the union rank-and-file votes on the agreement Tuesday. The casinos had been seeking steep concessions on hourly pay and wanted employees to contribute for the first time to their health and pension benefit costs.

“Both parties put a significant amount of effort into reaching an agreement that preserves the promise of good jobs for workers in Atlantic City casinos, while at the same time ensuring the company moves forward on sound financial footing,” union President Bob McDevitt said.

Don Marrandino, eastern division president for Caesars Entertainment, said the pact was a relief.

“The Atlantic City visitor experience begins with our employees — they are crucial to the success of our industry and that of the destination,” he said.

Both sides had said they wanted to avoid a strike that could have been extremely damaging to both sides. Atlantic City continues to struggle with plunging revenue brought on by competition from casinos in neighboring states. Indeed, the deal was reached on the same day that New York City’s Aqueduct racetrack opened its new casino, which is expected to further draw from Atlantic City’s customer and revenue base.

After the ratification vote, the union is expected to take the deal to other casino companies in the city and ask if they, too, are willing to abide by its terms. Those companies include Trump Entertainment Resorts, the Tropicana Casino and Resort, Resorts Casino Hotel and ACH, the former Atlantic City Hilton, which is trying to find a buyer.

The union represents cooks, housekeepers, bartenders, cocktail servers and other service workers.

The only casino not included in the current bargaining is the Borgata Hotel Casino & Spa, whose contract has 10 months left on it.

Four Atlantic City Casinos Fined

Four Casinos Heavily Fined in New Jersey

The casinos in New Jersey appear to be having a bad time with casino inspectors and are being heavily fined for having failed to meet the security standards required. So far, four prominent blackjack casinos in Atlantic City have been penalized by New Jersey authorities to the tune of $115,000. Three of the casinos were pulled up for permitting underage gaming, while the fourth was fined on account of a blackjack scam.

Tropicana Casino and Resort

The Tropicana Casino had to cough up a big fine because it did not manage its blackjack tables appropriately and failed to spot a blackjack dealer scam. The dealer had teamed up with a blackjack player and stole $21,500 over a course of 21 weeks. The casino was fined $40,000.

Trump Plaza Hotel and Casino

The reputed Trump Plaza Casino was also subject to fines of $20,000 by New Jersey authorities for allowing a 19 year old to consume alcohol and play blackjack without checking his identification. The teenager ordered many drinks and even used a card counting system.

Trump Taj Mahal Casino Resort

Yet another Trump Casino was fined, when a 20 year old girl was found playing at the Trump Taj Mahal. The player was heavily intoxicated and had been at the blackjack tables for hours. The casino was fined $20,000.

Atlantic City Hilton Casino Resort

This casino had to spill a $15,000 when a 20 year old was spotted at the blackjack tables. Fortunately for Atlantic City Hilton, this player was caught within 45 minutes.

Atlantic City: Cheap rooms

Cash grab is one way for Atlantic City's casinos to attract customers during the dead of winter

By DONALD WITTKOWSKI, Staff Writer


ATLANTIC CITY - Hotels.com lists room rates for the Atlantic City casinos that sound like a throwback to the 1970s.

At the Atlantic City Hilton Casino Resort, rooms start at just $55. Not low enough? Then what about $44 per night at Harrah's Resort?

But the bargains get even better. Showboat Casino Hotel is offering a $39 rate. And the cheapest rooms can be found at Resorts Casino Hotel - a mere $31 a night.

Casinos are desperate to draw customers in the dead of winter. They have gone into survival mode, hoping that their sprawling gaming floors and soaring hotel towers do not go empty in January and February.

Casinos usually lay off workers in winter in response to lower business. In December, nearly 500 jobs were eliminated industrywide, dropping the total casino work force to 34,145, New Jersey Casino Control Commission employment statistics show.

December's casino revenue figures illustrate just how grim things can be for Atlantic City's 11 gaming halls in winter. Revenue generated by slot machines and table games plunged nearly 13 percent .... compared with the same month in 2009.

S115K Atlantic City Casino Fines

$115K in Casino Fines for Cheating, Underage Cases
New Jersey set to fine casinos $115,000 in cheating, broken alarm, underage gambling cases

New Jersey casino regulators are set to hand out $115,000 in fines Wednesday to Atlantic City casinos who failed to immediately catch a cheating dealer and customer, had a malfunctioning alarm system that let a robber walk away with $8,000 after holding up a cashier, allowed someone other than the winner to fill out tax forms for five slots jackpots, and allowed underage patrons to gamble and drink.

The fines come as state lawmakers are set to consider a bill that would remove full-time inspectors from the casinos in order to let the gambling houses save money.

The biggest fine is against the Tropicana Casino and Resort for not immediately catching a dealer and a customer who had been cheating at a table game for seven months ending in May 2009.

According to documents filed with the state Casino Control Commission, which is to issue the fines, the Tropicana is accused of failing to adequately supervise a game of blackjack, failing to properly collect losing bets and pay off winning ones, and failing to detect cheating.

The case involves 20 to 30 occasions from November 2008 to May 2009 in which a Tropicana dealer admitted he overpaid a patron, or failed to take his chips when the customer lost a bet.

An unidentified patron notified a Tropicana security shift manager, who confronted the dealer and removed him from the game. He later confessed to the cheating scheme and was arrested.

It could not immediately be determined what eventually happened to the dealer or the customer, who were not identified in casino commission paperwork. The state attorney general's office could not immediately locate records on the case, and Tropicana officials did not respond to requests for comment.

Caesars Atlantic City was to be fined $10,000 for a July 2009 incident in which a silent holdup alarm malfunctioned twice, allowing a robber to get away with $8,000 in cash. The cashier hit a button activating the alarm, which was supposed to alert the security and surveillance departments, but it failed to work.

Trump Plaza Hotel Casino was to be fined $20,000 for allowing an underage player to gamble in September 2009. The 19-year-old man played slots, roulette, a card game known as Spanish 21 and blackjack. New Jersey's minimum age for gambling and drinking is 21.

The Atlantic City Hilton Casino Resort was to be fined $15,000 for allowing a 20-year-old Maryland man to play blackjack for 45 minutes in March 2010, and Trump Marina was to be fined $10,000 for record-keeping violations stemming from a February 2010 incident.

In that case, a man playing slots won five jackpots of $1,200 or more, each of which required a manual payout by casino personnel, who are required by law to fill out tax forms for the winner. The man showed a casino player's card that bore his friend's name, and filled out the tax forms in that person's name, according to records in the case.

Casino security located the friend, who claimed to have been the real winner of the jackpots, and then filled out a new set of tax forms as casino security destroyed the original tax forms, according to documents in the case.

And the Trump Taj Mahal Casino Resort was to be fined $20,000 for allowing a 20-year-old woman to play slots and drink in May 2010.

The casinos involved all either declined to comment or did not respond to requests for comment.

Later this month, the state Assembly is expected to consider a deregulation bill that would entrust the casinos to police themselves to a much greater degree than they do now. It would, for example, eliminate a requirement that at least one state inspector be on the floor of each casino 24 hours a day.

Those proposals have drawn fire from critics who fear it would open the door for more criminal acts to occur in the casinos. But the gambling halls strongly favor the proposed changes, saying they are paying for unduly restrictive supervision that is hurting their bottom line.

In an interview last week with NJN, the state-run TV network, two former New Jersey governors said it would be a bad idea to water down regulation of Atlantic City's casinos.

"When I signed the law, I told the mob to stay out of Atlantic City," said former Gov. Brendan Byrne, a Democrat. "There's a big pile of money in Atlantic and since Biblical times, where there's money there's corruption. And we've got to watch out for it. The regulations we have in place are working."

Former Republican Gov. Thomas Kean agreed.

"Gambling is corrupt in a number of places," he said. "Not in New Jersey, because this governor put in good solid regulations to make sure it didn't happen in New Jersey. You start to ease those regulations, and we'll have corruption, corrupt gambling like we do in so many other places. It's too big a pot of money and it's gonna attract flies. And the worst kind of people, and so I think we ought to keep the regulations strong."

The deregulation bill has already passed the state Senate.

Resorts defaults

Atlantic City Hilton Casino Resort is headed back to court

ATLANTIC CITY - The Atlantic City Hilton Casino Resort, losing millions of dollars and under threat of foreclosure, is heading back into court to try to prevent its lenders from seizing control of the gaming hall.

U.S. Bank National Association filed a motion asking for permission to foreclose on Atlantic City's smallest casino, now in default of its mortgage. A hearing is scheduled Tuesday morning in Atlantic City before state Superior Court Judge William C. Todd III.

Even if Todd grants the motion, the bank would not immediately foreclose on the property. An attorney for the Hilton's owners is predicting it would be a long and difficult legal battle before the bank ever takes over the Boardwalk casino, assuming it goes that far.

"There's a lot of complexity to it, depending on what happens," said Gilbert L. Brooks, a New Jersey lawyer who represents Resorts International Holdings LLC, an affiliate of Colony Capital LLC, a California-based private real estate investment firm that bought the Hilton and three other casinos in Mississippi and Indiana in 2005 for $1.24 billion.

That company sold one of those properties, Resorts East Chicago, in East Chicago, Ind., to Ameristar Casinos Inc. in 2007 for $675 million.

U.S. Bank wants to foreclose on the Hilton because the casino stopped making payments on its mortgage in July 2009. As of September, the Hilton missed $39.3 million in interest payments on the mortgage, the company said in its latest quarterly tax filing with the New Jersey Casino Control Commission.

In a court hearing in September, attorneys said the Hilton and its two sister casinos in Mississippi owe $500 million on their combined mortgage.

The Hilton had been trying to negotiate a debt restructuring with its lenders, but the ongoing court fight suggests those talks have not been productive. Brooks declined to say whether both sides were attempting to work out a settlement. Joseph Lubertazzi Jr., a New Jersey attorney for U.S. Bank, could not be reached for comment.

Characterizing U.S. Bank's motion as "premature," Brooks said the

Hilton will ask the judge for more time to defend itself. The dispute is expected to head to trial if Todd rejects the foreclosure request, beginning what could be a drawn-out fight.

If Todd rules in favor of U.S. Bank, the foreclosure route could be similarly lengthy, Brooks said. New Jersey foreclosure proceedings often take months to complete, which would give the Hilton's owners more time to try to save the property or negotiate a settlement.

U.S. Bank has been putting legal pressure on the Hilton throughout the year. In September, the bank asked Todd to force the Hilton into receivership so it could be sold. However, the judge denied the request then, ruling that receivership would not significantly improve things at the troubled casino.

The Hilton suffered a $4.7 million operating loss in the third quarter and is $19.1 million in the red through the first nine months of 2010. It has lost more money this year than any other Atlantic City casino.

Barring a settlement with lenders, the Hilton could follow the same track as its former Atlantic City sister property, Resorts Casino Hotel.

Lenders took over Resorts from former owner Colony Capital in December 2009 after the casino defaulted on its $360 million mortgage and was threatened with foreclosure. The lenders sold Resorts this month for $31.5 million to Atlantic City gaming executive Dennis Gomes and New York real estate magnate Morris Bailey.

Landry's Restaurants Inc., parent company of the Las Vegas Golden Nugget Casino Hotel, expressed an interest in buying the Hilton in September. No price was disclosed then, but Landry's said it wanted to rebrand the Hilton as a Golden Nugget property. Before it was renamed the Hilton, the casino was known as the Golden Nugget when it opened in 1980 under the ownership of Las Vegas gaming mogul Steve Wynn.

Lloyd D. Levenson, an Atlantic City attorney representing Landry's, did not know whether the company still has an interest in the Hilton. Steve Scheinthal, executive vice president and general counsel of Landry's, could not be reached for comment at the company's corporate office in Houston.