Will Nevada follow Jersey’s lead?

Dec 11, 2007 6:22 AM

Bill Yung and his Columbia Sussex crew were probably hoping for a heavily-conditioned finding of suitability from the New Jersey Casino Control Commission.

It looked like their best hope as final arguments were wrapped up in that contentious hearing to decide whether the privately owned Kentucky company remains in place at the Atlantic City Tropicana.

Nevada regulators have been keeping an eye on the New Jersey drama to see if the outcome there might trigger Nevada action of one kind or another.

One part of the Division of Gaming Enforcement’s charges against Sussex will almost certainly get Nevada’s attention. It is the charge that the company’s outside and independent auditor, Las Vegas attorney Jeff Silver’s law firm does not meet the test of being independent.

The firm’s contract with Sussex is said to contain provisions calling for the possibility of future legal work.

As for the principal suitability issue, representatives for all sides were acknowledging outright denial in New Jersey as a very real possibility.

"Sussex gave the Commission all it needs (for denial). It’s just a matter of whether the Commission members can bring themselves to pull the trigger."

This comment was from a source familiar with thinking among members of the Commission that must give Sussex at least five votes if the company is to retain its right to own and operate the Trop.

Which is why members of the regulatory body were paying attention to how powerful influences elsewhere might respond to a denial.

Columbia Sussex has not made a lot of friends in either Atlantic City or Las Vegas, where Culinary Union members are still without a contract and hundreds of workers lost their jobs, but it is in New Jersey where the challenges are, well ”¦ daunting is a word that comes to mind.

Conditioned approval appeared to be the company’s best hope as members of the Casino Control Commission began their deliberations about the proper handling of a licensee that had done so many things wrong since buying Aztar Corp. early this year.

Members of the New Jersey Commission are expected to deliver a decision when they meet Wednesday, but in the last week sources close to the Commission have been quietly sounding out industry followers.

Their question appeared to amount to this: What would be the reaction to a denial?

Would the industry as a whole suffer, as it did 22 years ago when Hilton Hotels failed in 1985 to get sufficient votes for a license and influential industry leaders such as Kirk Kerkorian became abruptly reluctant to associate themselves with a jurisdiction that would treat Hilton as New Jersey did?

New Jersey leaders are rightfully proud of the fact that their state is seen as a safe place for the billions in capital spending that appear destined to be invested there by a number of companies.

Would rejecting Columbia Sussex damage this reputation?

It appeared that the Commission was looking for input on this issue last week, not that this by itself would be the deciding factor, but it is an issue.

Members of the Casino Control Commission are keenly aware of the big picture of gaming industry expansion.

Columbia Sussex may be a premier operator of hotels in markets that have few of the Atlantic City or Las Vegas dynamics but the company has stumbled badly in these two travel destinations.

The graphic descriptions in testimony before the Commission about poor service, bed bugs, cockroaches and unsanitary conditions can be overcome only with the kind of marketing finesses that might be beyond its reach.

We can probably expect Sussex officials to continue their public embrace of the argument that they have been mugged by malevolent pro-union forces who reject what Yung contends is a reasonable approach to business. Those officials also reject the argument that nearly a thousand job cuts since Sussex took over the Atlantic City Tropicana is a bit over the top in terms of belt tightening.

There have also been hundreds of cuts at the Las Vegas Tropicana, but free market forces generally get more leeway in a state where the regulatory process does not have all the sharp edges associated with Atlantic City.