Author: Casino Connection Staff

A state-imposed payment in lieu of taxes plan for Atlantic City cost its home county about $5 million in taxes, Atlantic County officials say.

The county is challenging in court the tax plan for city casinos that was approved by the state legislature to help shore up Atlantic City’s finances and stop expensive tax appeals by casinos.

The county received about $100,000 more from the casinos in 2017 than it did in 2016, but officials said the program—which removed the casinos from tax rolls—lowered the entire Atlantic City tax bill.

The tax bill for all of Atlantic City, including the casinos, was $24.9 million in 2016 before the PILOT. In 2017 that same tax bill was $19.9 million.

According to the county and reported by the Press of Atlantic City, the loss of ratable value caused by removing the casinos from the tax base lowered the resort’s share of county taxes by more than could be corrected by only receiving a 10.4 percent share of the Pilot funds. While the casinos paid more, the city as a whole paid nearly $5 million less in 2017.

Representatives from the state Division of Consumer Affairs told the Press that the county is playing politics and maintain there was no need for a county tax increase this year.

“The county received more money under the casino PILOT payments this year than it would have received under ad valorem taxes,” Lisa Ryan, a spokeswoman for the DCA told the paper. “So, the county’s argument against the PILOT law is strictly political in nature and has no basis in reality.”

The county maintains that taking casinos out of the tax base under the PILOT legislation resulted in a loss of $3.2 billion in ratables or about 10 percent of the county’s tax base. The loss of that 10 percent affects every other municipality as the county equalizes property values as part of its process of setting one county tax rate for every municipality.

That means taxpayers outside of Atlantic City pay more.

“We received $7 million from non-casino taxpayers in Atlantic City, which is substantially less than in the past,” said Keith Szendrey, assistant to the Atlantic County tax administrator. “By taking the casinos out of the tax base, it decreased the value of Atlantic City. When the value of one town drops, the others have to make up for it.”

The county sued the state of New Jersey in the spring over the PILOT bill, claiming it is unconstitutional under state law. The case is pending a decision in Superior Court.

In another indication that a Colorado-based group is purchasing Atlantic City’s closed Revel casino, Moody’s Investor Services issued a report on the finances of the purchase and plans to reopen the property in May, 2018.

There has been no official announcement of a sale and the current owner of the property—Florida developer Glenn Straub—has denied he is selling the building to the group. However, local media and now Moody’s have been able to trace the sale through various filings with state and regulatory agencies.

According to the Moody’s report, the Colorado-based group AC Ocean Walk LLC will pay $200 million for the property and invest an additional $175 million. The group is planning to reopen the property by May 2018.

In another report from the Associated Press, AC Ocean Walk has also applied for a New Jersey casino license, which includes making a $100,000 non-refundable application fee.

In October, AC Ocean Walk LLC and Polo North Country Club Inc., owned by Straub, filed a notice of settlement for the sale of the property according to the Press of Atlantic City. Straub, however, denied he is selling the property when contacted by the paper. The Press also noted that there is still no record of sale of the casino at the Atlantic County Clerk’s Office.

The Moody’s report is reportedly based on financial documents surrounding the proposed loans needed to finalize the purchase. Last month, the company signed a mortgage committee letter with Deutsche Bank, according to county records. No terms were released in the filing, the Press reported.

According to state business records cited by the Press, AC Ocean Walk LLC is managed by Colorado-based Ten RE ACNJ, run by Colorado-based businessman Bruce Deifik.

The company was formed in April 1990 to handle acquisition, development, asset management, property management, leasing and disposition of commercial properties under the ownership of Deifik and his investment partners.

According to the reports, AC Ocean Walk will operate 100 gaming tables, 2,000 slot machines, 1,399 hotel rooms, pools, a spa, nightclubs and 13 restaurant options at the reopened property as well as 55,000 square feet of retail space and a parking garage with more than 7,000 spaces.

“The property is expected to slowly capture its fair share of the market given the quality of the property, breadth of project offerings and a revamped operating strategy aligned with the demands of patrons in the market,” Moody’s report said.

Straub and Polo North bought the closed Revel out of bankruptcy court for $82 million in 2015. The property cost $2.4 billion to build.

Straub has been unable to negotiate New Jersey’s casino regulations—as well as local building regulations—and has missed several announced dates to reopen at least parts of the property.

If Revel should re-open, it will complement other developments to revitalize the resort’s northern Boardwalk, which was hit hard by the casino closings of the Trump Taj Mahal, Showboat casino and Revel. Resorts casino was the only property in the casino cluster that did not close.

However, the Showboat has reopened as a non-casino hotel and Hard Rock International has purchased the former Taj Mahal and expects to reopen the totally renovated property in the summer.

Part of Hard Rock’s plans were announced as the company wants to build a gas station at the property’s entrance at the corner of Pacific and Virginia avenues. The plans were filed with the New Jersey Casino Reinvestment Development Authority which oversees the city’s casino and tourist districts.

Rockstop Gas & Wash would include a convenience store, gas pumps and a car wash. In June, Hard Rock opened its first gas station in Northfield, Ohio, as part of its Hard Rock Rocksino, according to the Press.

“The gas station is just one of many exciting things to come,” said Liz Thomas, a spokeswoman for the developers. “We’re so pleased to partner with Hard Rock during this renaissance in Atlantic City that wouldn’t be happening without the cooperation and support of the state of New Jersey.”

Hard Rock investors Jack Morris and Joe Jingoli are spending about $500 million to renovate the Taj. The company expects the project to generate more than 1,000 construction jobs and 3,000 permanent jobs, the Press reported.

Opt-out list up to 400

Eric Schippers, vice president of public affairs and government relations for Penn National Gaming, has been one of the most outspoken critics of Pennsylvania’s new gaming law, particularly the new satellite, or “mini” casinos created by the law, which he says will put his company at a competitive disadvantage.

But in an interview last week with Online Gaming Report, Schippers took aim at the larger gaming law.

“This was a money grab, plain and simple,” Schippers said. “The legislature decided that, rather than being fiscally responsible in cutting programs and spending, it would try to expand its way out of a budget mess. So they’ve done it in a way that will result in significant cannibalization. And the tax rate on online slots is just ridiculous and unprecedented.”

On the satellite casino provision, which authorizes casinos offering a maximum 750 slots ant 30 table games provided they are at least 25 miles from an existing casino, Schippers repeated his complaints that Penn will lose customers, since many of its customers drive to the company’s Hollywood Casino outside of Harrisburg from more than 25 miles away.

Schippers did not rule out Penn bidding on a satellite casino, if only to protect its market share for Hollywood Casino. Bidding begins on January 10 and extends through May the minimum bid is $7.5 million per license, with an additional $2.5 million for table games.

Schippers also slammed the new law’s taxation of online slot revenue at the same rates as brick-and-mortar casinos, 54 percent, noting that it costs more to market online slots than land-based slots.

“We know the tax rate on slot machines doesn’t make sense and will continue to be an advocate for a lower tax rate, but we haven’t ruled anything in or out,” Schippers said.

Meanwhile, the number of statewide municipalities passing resolutions to ban the satellite casinos in their jurisdictions has swelled to 400.

The City Council of Philadelphia, which already hosts a casino with a second set to begin construction, voted unanimously to ban satellite casinos within the city, and also voted to ban video gaming terminals, or VGTs, at truck stops. While the city currently hosts no facilities meeting the law’s requirements for a truck stop, council members told the Philadelphia Inquirer the ban is intended to prevent entrepreneurs from expanding current gas stations to meet the requirements and add the games.

“We sent a strong message,” Councilman Bobby Henon told the newspaper. “It is dangerous to even think about this type of gaming expansion into our neighborhoods. It’s a truck stop today, but it could be stop-and-gos and bars tomorrow. It’s like inviting a vampire into our home and getting bitten.

“A city with 26 percent poverty, 12 percent deep poverty, we cannot afford to take that kind of risk. It would destroy the social fabric of the citizenry.”

On the other side of the state, commissioners in Pittsburgh suburbs Shaler Township, McCandless Township, O’Hara Township and Aspinwall Borough voted to prohibit mini-casinos. And also in Western Pennsylvania, Hollidaysburg Borough Council members voted to opt out of the program. The borough is near the city of Altoona, which has often been named as a potential satellite casino site.

Atlantic City saw a 4.6 percent increase in casino revenue for November bringing in $206.4 million according to figures released by the New Jersey Division of Gaming Enforcement.

That’s an increase over $197.3 million in November 2016 and was led by a 20 percent increase in online gaming revenue to $20.6 million over $17.2 million in 2016. Online gaming revenue has consistently topped $20 million a month for most of 2017.

The figures reflect the first month that revenue from the Trump Taj Mahal—which closed in October 2016—did not figure into the year-to-year comparison.

 “Despite the loss of Taj Mahal, the industry is poised to report the first calendar year increase in casino win since 2006,” said Christopher Glaum, deputy chief of the DGE in a press statement. “Including internet gaming win, total gaming win is on track to have its second consecutive calendar year improvement.”

Two of the city’s casinos reported revenue declines. Bally’s Atlantic was down 4.7 percent to $15.5 million and Harrah’s was down 7.6 percent to $28.4 million. The biggest gainer was Resorts which was up 18.6 percent to $14.9 million.

The Golden Nugget was up 15.2 percent to $23.6 million; Caesars was up 7.7 percent to $22.9 million; the Borgata was up 5.7 percent to $64.2 million; and the Tropicana was up 4.9 percent to $29.6 million, according to the Associated Press.

The Golden Nugget continues to lead Atlantic City’s online gambling market, winning nearly $6.2 million in November, an increase of nearly 63 percent over last year. The Borgata saw a 12 percent increase in online revenue to $4.2 million.

So far for 2017, total gambling revenue is $2.452 billion, up about 8 percent compared with the same period last year.

The Pennsylvania Gaming Control Board last week released the schedule for auctions to be held for licenses to operate the 10 Category 4 satellite casinos approved in the state’s new gaming law.

Current casino licensees get first crack at the licenses, which authorize a facility with a maximum of 750 slots and 30 table games, in a location that is not within 25 miles of any existing casino. The minimum bid for a license is $7.5 million.

The initial round of auctions will begin at 10 a.m. on January 10 at the gaming board’s public hearing room in Harrisburg. The second auction will be January 24, followed by two auctions each in February, March, April and May, with the final auction to be held May 16. (The complete schedule is available at the board’s website, gamingcontrolboard.pa.gov.) Licenses not awarded to current land-based casino licensees will be bid out to the general public.

Meanwhile, municipalities across the state are scrambling to meet the December 31 deadline to pass resolutions to ban the mini-casinos in their jurisdictions. As of press time, nearly 200 municipalities statewide had chosen to opt out of the program. The majority of municipalities on the opt-out list are in Eastern Pennsylvania, with Lancaster Chester Counties having the most, at 30 and 24, respectively.

(As December 31 is a Sunday, the actual opt-out deadline is Friday, December 29.)

“This auction process is entirely new in awarding casino licenses, so seeing 200 thus far is something that we’re processing, and obviously we’re going to see more passes,” Gaming Control Board spokesman Doug Harbach told TV station WHYY. “Even with this number of opt-outs, there certainly is a good bit of territory that these casinos could be located in.” There about 2,600 municipalities in Pennsylvania.

Among the more prominent municipalities opting out of the mini-casinos is the city of Philadelphia, where the city council last week voted the satellite facilities down in a preliminary vote. The lawmakers also voted to opt out of the provision of the new gaming law allowing slot machines at truck stops.

In other developments last week, the town of Gettysburg, predictably, voted to ban the satellite casinos, joining 22 other municipalities in Adams County, and the Erie County Council also gave the thumbs-down to mini-casinos.

More than 82,000 people attended Art Basel Miami Beach, up 6 percent from 2017 according to organizers. Among the parties, networking and art, visitors were treated to “Excerpts From the Taj Mahal (The Truth Always Happens”), including discarded pieces from Donald Trump’s former Trump Taj Mahal Hotel and Casino in Atlantic City. The show was curated by artist Peter Tunney, owner of the Peter Tunney Experience gallery at Wynwood Walls, who has recycled Trump’s discards into pieces of art.

Among the works displayed were two golden marquees weighing about 1,000 pounds each, oil paintings, wallpaper torn from the walls, a life-size elephant sculpture, headboards, rugs, construction blueprints and a 30,000-piece chandelier. Some items were installed right on the beach.

Tunney added, “Here was the idea: Make the world’s largest golden-plastic carnival of crap with the most slot machines in the world, borrow a billion dollars in 1990 at 14 percent interest and think you’re gonna kill it. Probably not your greatest idea ever. The truth always happens. It ends up in the garbage can.” He said, “Every square inch of the place was laid out in these plans. And it never worked. It was just a slow grind to the dumpster and basically didn’t serve anybody in any way.”

The former Trump Taj Mahal, which Trump bought for nearly $1 billion, featured an ornate crown of onion domes, a pair of two-ton concrete elephant statues and 17 crystal chandeliers. A little more than a year after it opened in 1987, the Trump Taj Mahal filed for bankruptcy and closed on October 10, 2016.

The Chamber of Commerce for Greater Philadelphia (the Chamber) is pleased to announce that Wendy Hamilton, general manager of SugarHouse Casino, will receive the 2018 Paradigm Award, the region’s most prestigious award for businesswomen.

“Wendy is one of our region’s most influential figures and represents our community of outstanding business leaders,” said Chamber President and CEO Rob Wonderling. “She has paved the way for women in business as a successful leader of SugarHouse Casino, both regionally and nationally.”

Hamilton oversees 1,500 employees and all day-to-day operations at SugarHouse, including the property’s gaming repertoire, seven food and beverage venues and the Event Center. In addition to managing all property amenities, Hamilton supervises all human resources, marketing and finance functions.

A Philadelphia native, Hamilton received a bachelor of science in biology from Duke University and a master of business administration in finance from Saint Joseph’s University. Outside of the workplace, she is an active community leader serving on the boards of the Chamber, the Police Athletic League of Philadelphia and Visit Philadelphia.

Hamilton was named a 2017 Emerging Icon by the Philadelphia Inquirer for her outstanding leadership and dedication to making positive community impacts. In 2015, she was honored with the PAL Award from the Police Athletic League and the Cornerstone Award from SmartCEO for corporate leadership.

In addition to these honors, Hamilton has earned numerous leadership awards honoring women, including the Woman Who Empowers Us Award from 95.7 BenFM, and the Women’s Achievement Award from KYW Newsradio.

Under Hamilton’s leadership, SugarHouse has long been the title sponsor of notable city events like the New Year’s Eve fireworks and the Mummers Parade, and has also contributed more than $8 million to local community organizations, including the Penn Treaty Special Services District.

“It’s an incredible honor to receive the Paradigm award,” said Hamilton. “Not only am I proud to join this exclusive club of Philadelphia business leaders, but this award reflects the hard work and dedication the SugarHouse Team Members put in each and every day.”

This award has been given annually since 1992, Ms. Hamilton being the 26th Paradigm honoree. She is joining a distinguished field of past recipients that includes Teresa Bryce Bazemore of Radian Guaranty, Inc.; Emily Bittenbender of Bittenbender Construction LP; Sue Schick of UnitedHealthcare; Mary Stengel Austen of Tierney; Renee Amoore of The Amoore Group; and Judith von Seldeneck of Diversified Search Companies.

Soccer is coming to the Shore and Tropicana Atlantic City is lending a hand.

The Atlantic City Football Club (ACFC) has joined the National Premier Soccer League (NPSL) as a new expansion team and is partnering with Tropicana casino to bring world class sporting events to the local community.

“Atlantic City is a tremendous market for soccer and we’re glad to have ACFC as part of the NPSL family,” said Joe Barone, NPSL chairman.

The ACFC is the first semi-pro soccer team to represent Atlantic City. The team will operate its program out of nearby Stockton University, which has a natural grass field and bleacher seating for over 2,000 people. The team will be part of the Keystone Conference and will face 9 other teams in their division. With approximately 26 players—mostly college athletes— the ACFC is looking to turn each home game into a community event.

“We want our games to be community events,” Nicholas Bilotta III, the co-owner and COO of the team, said at a recent press conference.

Bilotta emphasized the wider impact of the games, which will include free youth soccer clinics, a food truck festival, a farmer’s market and other music and art exhibits to turn each home match into a family-friendly experience. For the 2018 season, which begins in early May and runs into August if the team makes the playoffs, the club will play 10 to 14 games, with half of them on their home turf. The ACFC is also planning a shuttle service using local jitneys to ferry people the 15 miles from Atlantic City to Stockton.

“We believe the NPSL embodies a lot of what we want to bring to Atlantic City,” said Bilotta. “Successful teams like Detroit City FC, Kingston Stockade, New Orleans Jesters, Elm City Express, and many others offered a tremendous source of inspiration for us. The community focus, the exciting experience, and the player development were all very attractive factors in our decision.”

Tropicana Atlantic City has signed on as the premier corporate sponsor and was instrumental in the team’s creation. Tropicana General Manager Steve Callender has a personal connection to the sport, having been a soccer player and a coach.

“Soccer is the fastest growing sport in the country,” said Callender. “We are happy to bring more fun and excitement to the local community and our guests as a proud sponsor of the Atlantic City FC. “

Along with financial support, Tropicana will house a number of the athletes in their newly acquired Chelsea Tower, as well as assist players in getting local jobs. The casino is also looking for players to host interactive events with their customer base.

Callender said one of the reasons Tropicana was partnering with the team was because the ACFC was “up to speed” on their social media campaigns and it was a good way to enhance both the club and the casino’s brands.

Though no current games are scheduled to be played in Atlantic City, Bilotta said that is something the ACFC would like to do in the near future. The team would like to be part of any redevelopment plans at Bader Field, although right now it is too costly to renovate the closed Surf Stadium to make that a reality. The ACFC hope to showcase their youth soccer clinic with a tournament on the Atlantic City beaches in 2019.

The team has deals to broadcast home games on WOND Radio 1400-AM. Tickets to games will be priced at $11, with one dollar of each ticket sold going to charity.