Author: Roger Gros

The current effort to remove iGaming revenue from the calculation of the PILOT (payment in lieu of taxes) program in Atlantic City brings out the worst in the casino industry and local politicians.

Let’s recall that Atlantic City gets no sports betting revenue tax unlike other areas of New Jersey where racetracks are located and sports betting is conducted because Atlantic City supposedly has the “benefit” of all the legal casinos in the state located within its boundaries (something we’ll come to later in this piece). The “benefit” of casinos to Atlantic City has been overblown for years. Yes, Atlantic City imposed property taxes on casinos like any business in any other city. But when casino revenues started to decline during the recession of 2007-2010, casinos would routinely appeal their property tax value and almost always received a rebate, making city finances a shaky thing. And let’s also not overlook that New Jersey was just the second state to legalize gaming in the U.S. and the concept of casinos paying anything more than simple property taxes to the municipality where they were located was not yet established. Today, however, it’s routine for casinos in most states to pay fees on gaming devices, a percentage of win or some other calculation to the host jurisdiction. Atlantic City gets nothing like that.

So when the appeal of property taxes became an epidemic, state officials came up with the idea of the PILOT program where, instead of paying property taxes, casinos would pay a percentage of the gross gaming win to the city. So the better the casinos did, the better the city did. Made sense and avoided those nasty appeals that not only required the city to pay millions in tax rebates but also cost millions in legal fees to fight such a move. At that time, online gaming revenues were miniscule compared to the land-based revenue, so there was no thought of separating the two. The bill was signed into law in 2016 for a period of 10 years.

But as casinos began to close, the PILOT payments began to shrink, and the city had to raise taxes on residences and small businesses to make up for the shortfall. The result is a wildly fluctuating tax rate that causes property values to fall, businesses to flee the city, and chokes off investment in the city because when you can’t predict a stable tax rate over the next five years, you can’t predict a return on your investment. Lots of good ideas of how to turn around Atlantic City have fallen victim to that uncertainty.

In the meantime, the state came in and took over the finances of the city, taking all the power away from local officials. Now granted, local officials have rarely performed adequately in handling city finances, but the state has taken extraordinary steps to make up that gap between the city budget and the failing PILOT program, borrowing millions of dollars and plunging a failing city into even greater debt, a hole that has no way out.

During the pandemic, Atlantic City’s share of the PILOT revenue fell even farther because casinos were closed for four months. But the one thing that didn’t dry up completely was iGaming revenue. It was a bulwark against a complete melt down of the finances of Atlantic City.

And now state officials want to remove that bulwark so the city would be at constant threat of zero casino taxes should another pandemic occur. And the worst part? It’s being led by politicians who supposed are “friendly” to Atlantic City including our two assemblymen who supposedly represent the city and its residents, Vince Mazzeo and John Armato. Spearheading this effort is Senate President Steve Sweeney, who has usually supported measures to improve Atlantic City. Now, is it just a coincidence that all three of these “representatives” recently lost their bids for re-election, signaling that the voters were unhappy with the jobs they were doing?

This bill would irreparably damage Atlantic City. Newly elected state Senator Vince Polistina and Assembly members Don Guardian and Claire Swift oppose this bill as any public official representing Atlantic City should. It is, as they say, a no-brainer.

Anyone who has visited Atlantic City lately should be concerned. Atlantic City has always suffered the same ills as any large city in the northeastern U.S. Crime, homelessness, a lack of sanitation and upkeep of the roads can be found anywhere in this region, so it’s not surprising that Atlantic City is afflicted by the same symptoms. But with less money to devote to public safety, sanitation, and infrastructure improvements, Atlantic City will become even less attractive to visitors, many of whom already opt for Pennsylvania, Connecticut or New York casinos usually located in safe suburban locations. The perception of Atlantic City will clearly fall among people considering a visit to Atlantic City casinos, making it more difficult for casinos to attract new customers.

The argument for the bill is that online gaming revenue is money earned by bets made outside of the Atlantic City borders, therefore that revenue should not be split with Atlantic City. But the very justification for the legalization of online gaming and sports betting in New Jersey said the bets were being made inside the borders because the servers that transmit those bets are located in Atlantic City. This was the justification of legalizing online gaming to begin with. Remember, casino gambling is illegal in New Jersey unless it’s conducted in Atlantic City, the only jurisdiction where it is legal as per the state Constitution, amended in 1976 to legalize casino gambling only in Atlantic City. If online gaming and sports bets were legal outside of Atlantic City, a second constitutional amendment would have been necessary so the technicality of bets being made on the servers in Atlantic City was invented. So the blatant hypocrisy of removing online gaming revenue from the PILOT calculations is astounding.

So let’s finally talk about why this is happening now. Why would the very representatives that are supposed to support the needs of their constituents turn their back on them? There has been no public campaign by the Casino Association of New Jersey to implement these measures. Since casino companies and their executives are prohibited from contributing to the campaigns of state politicians, there can’t be an quid pro quo here. But there has to be some coordination for one reason or another to have the politicians support this bill. The fact that this bill only benefits the casinos makes it that much more suspicious. It’s not going to create more jobs. It’s not going to convince the casinos to reinvest in their properties. It’s only going to benefit the casinos’ bottom line. It stinks to high heavens and the casino industry and the politicians supporting this bill have much to answer for. This bill should be shelved for the benefit of everyone involved, including the casinos.

Penn National Gaming has been the industry’s third largest gaming company for more than a decade now. Jay Snowden took over from Tim Wilmott in January 2020 and immediately embarked on a plan to make Penn more interactive. Two months later, he announced a deal to buy 36 percent of Barstool Sports and its millions of followers, creating a sports betting juggernaut that has had immediate success. Now that the pandemic is winding down, Snowden talks about the position of his company, the addition of additional interactive pieces and how he plans to guide Penn toward the future. He spoke with Publisher Roger Gros at the Penn offices in Pennsylvania in July.

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Back in March when the pandemic began, Tom Cantone remembers sitting in his darkened offices in the Mohegan Sun Arena grasping for ways to bring back the jobs that were on hold. One call to Viacom produced a “residency” for their MMA and boxing shows. That set the stage for “Bubbleville,” a plan to host four pre-season basketball tournaments usually held at other locations. Cantone explains how each of these plans came about and how the procedures had to be designed from scratch. As some of the first sports to return during the pandemic, the arena became the only indoor venue offering sporting events in the U.S. Cantone spoke with CC and Global Gaming Business Publisher Roger Gros from his home in Connecticut during a snowstorm in December.

MGM Resorts International has changed quite a bit over the past few years. When the company instituted its MGM 2020 program that was aimed at reducing costs, creating efficiencies and streamlining the corporate structure, there was no vision of the pandemic. But when it hit in March of last year, MGM 2020 had the company prepared for the worst. But when Jim Murren resigned as chairman and CEO of MGM in February, Bill Hornbuckle was elevated to CEO. An inspirational leader who learned his trade working under Steve Wynn, Terry Lanni and Murren, Hornbuckle has set his priorities on his employees first and the future of the company soon after that. He spoke with Casino Connection Publisher Roger Gros at Hornbuckle’s office in the Bellagio in December.

Marty Small has been mayor of Atlantic City for almost one year, when he was selected by city council to fill the vacancy created when the previous mayor, Frank Gilliam resigned after being convicted of corruption while in office. Small won the Democrat nomination for mayor in the primary and now faces a nominal Republican opponent in November’s general election. During his term, he has worked with city council to keep property taxes down, grappled with the Covid 19 shutdown and dealt with the BLM protests where he has kept his city violence free after the first unfortunate incident in May. He spoke with Casino Connection Publisher Roger Gros in the Mayor’s conference room in the Atlantic City city hall in September.

The upcoming ballot question in Atlantic City is getting a lot of noise from people who consider it a travesty and another intrusion into Atlantic City from outsiders. The measure would change the form of city government to mayor-council to a council-manager form. If passed, there would be no more wards and five councilmen would be elected at large, with those five choosing the mayor. The council would then hire a powerful city manager who would have responsibility for running the city and all its departments and all its functions, including budgeting, hiring, negotiating contracts and more.

At first blush, I’d have to agree with the opponents. Voters in the city would no longer have the opportunity to elect a mayor. The councilmen would not represent any single ward in the city, so the individual wards—which are sometimes quite different—would get no special attention. Some believe it would disenfranchise minority voters by this lack of wards.

The organization that is pushing this change of government is called Atlantic City Residents for Good Government. Principal members of that organization are Local 54 President Bob McDevitt, former state Senator Ray Lesniak, Resorts casino owner Morris Bailey and his CEO, Mark Giannantonio. Their stated goal is to improve Atlantic City and remove the corruption that has plagued it for many years.

In a statement, McDevitt said, “The council-manager form of government will provide streamlined, efficient, and morally responsible leadership. By passing this referendum, Atlantic City residents will enjoy safe, clean streets, a balanced budget, lower property taxes and smart growth which will result in new development that will raise the living standards of all Atlantic City residents.”

Boy, that sounds good to me—despite the fact that it came from the mouth of Bob McDevitt who was largely responsible for the failure of Revel when its CEO refused to buckle under to his pressure to go fully union, even in businesses that Revel did not control. McDevitt’s reputation for running his union is also very sketchy and everyone who challenges his leadership gets quashed.

As for Lesniak, he’s got a track record for success. He started the ball rolling on sports betting in New Jersey and later the U.S. Despite claims by former Governor Chris Christie, Lesniak was the man whose passion and commitment made the difference.

Bailey and Giannantonio are looking out for their own interests, and for good reason. It’s actually refreshing to see casino executives, who have a huge stake in the success of the city, taking action to do what they believe is right.

Hard Rock International Chairman and CEO Jim Allen, an Atlantic County native, complained to Casino Connection last year about the shape of the city and the duplicity of city and state officials. And he’s right. He invested half a billion dollars into Atlantic City with the understanding the public officials would improve the areas leading to and surrounding his casino. It didn’t happen and he’s pissed. Finally someone has spoken up.

Not to get too down in the weeds, but the prohibition against casino executives participating in politics that dates back to the dawn of the gaming era has come back to bite the city. These are the people who should be assisting in running the city, setting its direction and making sure that the city is livable for residents and visitors alike.

And let’s not document the bad government that has washed over Atlantic City for many years. There has long been an attitude by elected officials that “now it’s my turn to get mine.”

The city council meeting of February 19 should have been recorded as a commercial for the change of government petition. The petty, back-biting, finger-pointing, sniping comments between council people, the mayor and king-maker Craig Callaway were disgraceful. This is the representative government that the people who want to defeat the change of government wants us to maintain??! No thanks.

I was a lowly campaign worker in the original change of government that was accomplished in 1980, switching from the commission form of government to the mayor-council form. Led by Seth Grossman and Jim Masland, the change was undertaken because the commission form of government led to many fiefdoms, cronyism and corruption. But now can we say that the mayor-council form has been any more successful? Sadly no.

It’s probably unfortunate that it doesn’t matter what form of government you’re using if you don’t have good people to operate it. Now we have many good people in city government. I believe Mayor Marty Small has the city’s interest at heart. Jesse Kurtz clearly understands what needs to be done. Even Kaleem Shabazz, a partner in the 1980 change of government, knows what will and won’t work.

They all oppose this most recent effort, and I can understand why. But I can also understand why many Atlantic City residents will vote for a change in government. They’re sick of the corruption, the incompetence and the declining standard of living in the city. Why not take a chance?

The opening of the Guitar Hotel at the Seminole Hard Rock in Hollywood, Florida, was a seminal moment for Jim Allen, who is the CEO and chairman of Seminole Gaming and Hard Rock International. His vision of a truly iconic building that will transform the Hollywood property into a destination resort took more than five years to develop, but the results are stunning. Allen leads a rapidly expanding Hard Rock International with new projects in California and Mexico, as well as proposals to build casinos in three U.S. states and two European countries. He sat down with Casino Connection Publisher Roger Gros during the opening of the Guitar Hotel in October to discuss the company’s roots, the tribe that supports him, and the success of the enterprise.

Encore Boston Harbor opened on June 23 in Everett, Massachusetts, across the Mystic River from Boston. Formerly contaminated with over 100 years of chemicals, the site was cleaned up and restored by Wynn Resorts in a complicated but satisfying process. Bob DeSalvio, the president of the property, explains that process and the lengthy and sometimes contentious path to opening. He describes the bumps along the way, the design and construction process and the dedication of the Encore team members. He spoke with GGB Publisher Roger Gros in his office at Encore Boston Harbor in July.

The saga of the Revel/Ocean property in Atlantic City took a major upturn earlier this year when Mike Donovan, a former marketing executive at the Tropicana, was hired by the new owners, Luxor Capital, to lead the Ocean marketing team. Donovan has wide experience in Atlantic City and other jurisdictions and has delivered some dependable formulas to turn around the fortunes of that struggling casino. And it seems to be working, with the property posting the highest gross gaming revenue ever in June. Donovan explains what the property has to offer his customers and how he positions it. He spoke with GGB Publisher Roger Gros at Ocean in July.

When Revel closed in Atlantic City in 2014, it seemed like the death knell for the city. It’s closing followed three others that year and would be followed by the shuttering of Trump Taj Mahal one year later. But like Atlantic City, Revel has returned, this time as Ocean Resort, owned by Bruce Deifik, the former CEO of the Greenspun Group in Las Vegas, who has some casino experience. His Ocean Resort has impressed visitors and had a decent first full month of July, as did the revived Hard Rock casino, the former Taj Mahal. Of course the next six months—the slow period in Atlantic City—will determine the success orf failure of several Boardwalk casinos. Deifik sat down with GGB Publisher Roger Gros at his offices in Ocean in August.

When Hard Rock International, Joe Jingoli and Jack Morris bought the former Trump Taj Mahal in 2017, they envisioned turning it into the glittering gem of the Hard Rock chain. Construction started in October 2017 and a massive effort by everyone involved allowed the Hard Rock to open on June 28, 2018 and take advantage of the Independence Day week that followed. Gaming veteran Matt Harkness was given the reigns at Hard Rock AC and directed the staffing, training and opening of the property. He talks about his relationships with the city, the state and the employees as they moved toward opening day. He spoke with Casino Connection Publisher Roger Gros at his offices in Hard Rock AC just a week after opening.

This special double issue of Boardwalk Podcast features interviews with both candidates running for mayor of Atlantic City. Republican incumbent mayor Don Guardian will face Democratic councilman Frank Gilliam this November. Casino Connection Publisher Roger Gros recently met with the candidates to ask how they plan to lead Atlantic City into the future as it struggles to emerge from financial setbacks and state control.

When Don Guardian was elected mayor of Atlantic City in 2013, he beat all the odds—a gay, white Republican in a predominantly African American city, he defeated a sitting mayor by cobbling together a diverse coalition of all creeds, races and sexual orientations. But soon after he was elected, Governor Chris Christie enforced a state takeover of the city, overseeing Atlantic City’s finances and creating a fued between the state and the city that still persists. Guardian is up for re-election in November, facing similar odds he overcame four years ago. He spoke with Publisher Roger Gros, an Atlantic City resident, at his offices in City Hall in August.

Frank Gilliam has been a city councilman in Atlantic City for the past eight years. This year, he received the Democrat nomination for mayor, defeating the popular councilman Marty Small in the primary. He is running against the incumbent mayor, Don Guardian, who has been in office for the past four years. Gilliam is a lifelong resident of Atlantic City and speaks about his views of the city as it is today and his plans to revive the city if he is elected. He spoke with Casino Connection Publisher Roger Gros in mid-October at his campaign headquarters in Atlantic City.