The unprecedented overhaul of N.J.'s gambling industry includes the near-dismantling of the New Jersey Sports and Exposition Authority, refinancing of stalled Meadowlands Xanadu project
The Atlantic City takeover removes virtually all local control from the gaming district, from police protection to garbage pickup. At the same time the state is finally throwing in the towel on state-backed harness racing, which lost nearly $10 million last year.
The plans — reviewed by The Star-Ledger — were outlined in a report by a special commission created by the governor in February and charged with the task of deciding how best to fix the state’s faltering casino and horse racing industries.
The governor’s office put an advisory this afternoon saying only that Christie will announce the findings of the commission Wednesday at the Meadowlands in East Rutherford, and in Atlantic City, but provided no detail. A spokesman for the governor declined comment.
The recommendations, as outlined in the commission report, call for the most significant changes in New Jersey’s once lucrative entertainment, sports and gaming venues since casino gambling was approved and the opening of the Meadowlands in 1976.
Under the plan:
• Atlantic City’s entertainment and gaming districts would become an independent city within a city overseen by state government. That includes the casinos, the marina, beachfront and Boardwalk areas. Those parts of the city would all be put under the administration of a state authority directly answerable to governor.
• New Jersey Sports and Exposition Authority would be all but disbanded, becoming simply a landlord for the facilities it now operates.
• The Meadowlands Racetrack could be sold for a token $1, or turned into an off-track wagering facility without live horse racing. The plan also recommends that the Izod Center arena be privatized or sold.
• In addition, the state would help re-finance the long-stalled Xanadu project in the Meadowlands, enabling a new developer to take control of the garish, high-visibility retail and entertainment complex alongside the New Jersey Turnpike that many consider an embarrassment.
• Financial aid to help complete Xanadu would be contingent on changing the building’s much-hated mutli-color exterior, and requiring that it be an entertainment complex, not simply another mall.
The recommendations were made by a seven-member commission headed by former sports authority chairman Jon F. Hanson, who ironically was one of the movers behind the expansion of the Meadowlands Sports Complex and the reach of the sports authority.
Both Atlantic City casinos and the Meadowlands Racetrack have steadily been losing market share to out-of-state competition as gamblers are lured by places far closer to spend their money.
In recent years, Yonkers Raceway in New York added slot machines, becoming a "racino." Foxwoods in Connecticut continues to attract players from New York and northern New Jersey. And just last week, casinos in eastern Pennsylvania began operating table games once exclusive to Atlantic City, including poker and blackjack.
Some legislators have long pushed to turn the Meadowlands — only about eight miles from Times Square and now served by a new rail line — into the new Atlantic City. There has been legislation introduced that would allow slots or video lottery terminals at the racetrack, as well as serious discussions about turning Xanadu, which was never competed, into a casino serving the metropolitan area.
But the Hanson report specifically rejects any expansion of gambling at the Meadowlands. The Atlantic City casinos and the 38,000 jobs they provide remain an economic engine for southeastern New Jersey, and the report argues that Atlantic City be given a chance to get better before consideration is given to gaming anywhere else in the state.
Left unsaid was that the only hope Christie had for getting Hanson’s recommendations enacted was to keep casino gambling in Atlantic City alone. Any move to put gambling in the Meadowlands would result in certain opposition from Senate President Stephen Sweeney (D-Gloucester), who could unilaterally kill any of the legislation needed. Sweeney and the rest of the South Jersey contingent in the Legislature are vehemently opposed to gaming licenses being issued outside of Atlantic City.
Instead, the play is being made to keep Atlantic City a major destination resort and in fact expand its entertainment and amusement offerings. The report calls for the revival of the city’s convention business, which has gotten little promotional assistance. Criticizing a generation of underinvestment in non-gaming activities, it also suggests adding family type amusement rides on the boardwalk, and possibly the addition of a NASCAR track.
The Atlantic City casino skyline is shown in a 2007 photo. The report, though, was highly critical of Atlantic City’s municipal government. According to the report, developers, businesses and casino companies are now wary of investing there while visitors are reluctant to come because of a perception that it is not safe.
The authority would take control of security, planning and traffic in the district, essentially becoming a city within a city. Boardwalk Hall and the convention center would be taken over by the district, while the Atlantic City Convention and Visitors Authority would be shuttered. Money from the Casino Reinvestment Development Authority, now shared throughout the state, would stay in Atlantic City.
The report also called for sweeping changes and updates in the state’s gaming regulations, mirroring them more closely on Nevada. Rules and laws need to be updated and eased based on changes in technology since the casino rules in New Jersey were first drafted a generation ago — before the explosion of computers and prior to the gaming industry being taken over by multi-national conglomerates based in far-flung locales.
The report calls for the near-dismantling of the sports authority, which currently operates Meadowlands Racetrack and the Izod Center, Monmouth Park Racetrack, the Atlantic City Convention Center, Atlantic City Boardwalk Hall and the Wildwood Convention Center.
Created by the Legislature in 1971, the authority is operating in the red this year, largely because of massive losses in horse racing, as well as funding lost with the closing of Giants Stadium. The old stadium had generated $20 million in income for the authority. Under terms of a deal with the Jets and Giants, however, the authority will see only $6.3 million in lease payments this season when the two football teams move to the privately operated New Meadowlands Stadium.
Under the plan proposed by the Hanson commission, the authority’s operations would be privatized through sale or lease, and the agency itself would become little more than a landlord. The Izod Center would remain open, but sold or leased through a bidding procedure, and operated by a private company.
The authority, which drew fire earlier this year after disclosures that it spent more than $1 million to secure seats in the new football stadium, will be required to sell its seat licenses by March of next year.
The report also recommends that the state offer the Meadowlands Racetrack to the Standardbred Breeders and Owners Association for $1 a year, or simply eliminating racing there and turning the facility into an off-track wagering hall. A project to build another OTW facility in Bayonne would be delayed, pending a final decision on the Meadowlands.
Monmouth Park, which runs thoroughbred horse racing in Oceanport and expects to lose $10.9 million this year, would be leased out or sold as well.
Xanadu, the stalled retail and entertainment complex next to the Izod Center, would also be revived under the plan.
The $2 billion facility — which features an indoor ski slope, skydiving wind tunnels, hundreds of retail shops and restaurants, and was to be crowned with the country’s tallest Ferris wheel — had been slated to open in 2007, but ran into financing problems and sits unfinished amid questions over the long-term viability of the project. Billionaire real estate developer Steve Ross and his investment partners have been in discussions with the Christie administration for months about possibly taking over the project, but wanted state financing.
Under the proposals put on the table by Hanson’s commission, the state would either put up its own bonding or federal Recovery Zone Facilities bonds, charging the debt against future tax revenue. In return for the financing, state would expect to get an equity position in the project. Financing would be contingent on the Xanadu exterior being redesigned.
If the Xanadu project is not put back on track by year’s end, the report said the state should proceed with foreclosure.
Some of what the governor is calling for can be done through executive orders, but much of it will require approval of the state Legislature — a process that could take time.
By Josh Margolin and Ted Sherman/The Star-Ledger