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Government is the Problem

Anyone in the gaming industry has a healthy distrust of the government.

Government is the Problem

Anyone in the gaming industry has a healthy distrust of the government. Can you say “Illinois?” Or how about “New York?” And not to mention the oldie-but-goodie “New Jersey?”

And it is New Jersey that got me to think about this issue. Usually, I want the government to ignore the casino industry and just regulate the integrity of the games, while leaving the business side of the industry alone. And in New Jersey, that has been the fervent wish of every casino operator since the first casino opened its doors in 1978.

Unfortunately, that has rarely been the case. Throughout the 1980s, governors appointed the most onerous regulators to enforce the world’s strictest regulations. In the 1990s, they loosened up a bit but then began thinking of ways they could make the casinos pay more in taxes. And in the 2000s, they generally left Atlantic City alone, but the business climate soured so the casino industry has been in a two-year freefall.

In July, Governor Chris Christie—a Republican governor in the bluest of Democratic states—came up with a plan to “save” Atlantic City. It included wresting control of the casino district from a mostly incompetent and sometimes-corrupt city government, and setting up a separate agency to run that district. Most importantly, it ends the casino industry’s $30 million annual subsidy of the state racing industry and proposes a sale of the state-owned racetracks, while pledging to keep Atlantic City’s gaming monopoly in the state intact.

This is the most attention the casino industry has received from the state government since Governor Brendan Byrne backed the legalization of gaming in Atlantic City in 1976. And frankly, it makes me nervous.

Now, I admire Governor Christie more than any governor I’ve known in the state over this period. He is finally taking control of out-of-control spending and cutting back at all levels to balance the state budget. He is taking on powerful groups like the teachers’ union and the racing industry in a way that no governor ever has. And he’s telling anyone who listens that he’s been elected to do this job and will not stop until he’s finished.

But over the years, I’ve come to believe the old adage voiced by President Ronald Reagan in the 1980s: “Government is the problem, not the solution.” This belief has been reinforced many times both within the gaming industry and outside of it.

So, I have mixed feelings about the state of New Jersey taking over anything, much less something as important as the casino district in Atlantic City. As I write this, there are few details that have been shared by Christie. But unless casino executives play a major role in determining how the district will work, I fear that the overbearing ineptitude of government at any level will surely prevail.

I interviewed a legendary businessman from Atlantic City last month on this issue. Reese Palley is a name that resonates with gaming pioneers in Atlantic City. Palley ran several art galleries in the city and sold the old hotel to Bally Manufacturing that became its current site. Palley had a theory early on. He wanted to bulldoze all of Atlantic City and start from scratch—create an adult Disneyland with casinos. People scoffed at him in those days, but now he says we have that opportunity once again. He holds the Christie plan in disdain because he says it’s an unworkable plan that is destined to fail.

I’m not that cynical, but I do worry about the North Jersey politicians who are pleading with Christie to allow them to build a casino at the Meadowlands racetrack, across the river from New York City. Anyone who knows New Jersey understands the northern part of the state dominates the south, so Christie is going to have to be very strong to resist their entreaties.

But at least it is a plan. Up until Christie took office, there was only unrealistic hope that the decline would end at some point. That has yet to happen, so Atlantic City will cling to anything, even assistance from the state, which has been so unkind in the past.

And there is reason for hope. No state or city will ever reproduce what Atlantic City has: tens of billions of dollars in investment, a dozen first-class casino hotels on a fabulous beach and boardwalk, with great entertainment, nightlife, dining, shopping and more. Clearly, the economy is Atlantic City’s biggest hurdle, but, if done correctly, the Christie plan could spur a recovery. At least that’s the plan.

Roger Gros is publisher of Global Gaming Business, the industry's leading gaming trade publication, and all its related publications. Prior to joining Global Gaming Business, Gros was president of Inlet Communications, an independent consulting firm. He was vice president of Casino Journal Publishing Group from 1984-2000, and held virtually every editorial title during his tenure. Gros was editor of Casino Journal, the National Gaming Summary and the Atlantic City Insider, and was the founding editor of Casino Player magazine. He was a co-founder of the American Gaming Summit and the Southern Gaming Summit conferences and trade shows. He is the author of the best-selling book, How to Win at Casino Gambling (Carlton Books, 1995), now in its fourth edition. Gros was named "Businessman of the Year" for 1998 by the Greater Atlantic City Chamber of Commerce, and received the Lifetime Achievement Award from the American Gaming Association in 2012.

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