N.J.’s McGreevey puts pressure on Atlantic City casinos

Mar 11, 2003 4:52 AM

New Jersey Gov. Jim McGreevey is really applying a squeeze on the owners of Atlantic City casinos who have opposed both his proposals: to raise the gaming tax from 8% to 10% while also taxing casino comps, and to permit the state’s racetracks to install slot machines.

Last week, McGreevey announced that he was planning to scale back FamilyCare, the state’s program that provides health coverage for those making $30,000 or less. Also, his plan will include other changes including higher income eligibility levels for state subsidized health coverage, slashed prescription drug coverage for the elderly and disabled and reduced Medicaid reimbursements.

That brought a hue and cry from the state’s senior citizens through their organization, AARP.

"You can’t balance the budget on the backs of the most vulnerable people in our society," said an AARP official.

As for the cuts in FamilyCare, some 58,000 people of the 174,910 currently enrolled would be eliminated. The program currently covers some 93,000 children.

A spokesman for the governor said the cuts were necessary in order to prepare a barebones budget. However, she said, the cuts were still under review.

Also scheduled for major cuts in funding are school and municipal officials. They were told the degree of such cuts depended on the governor’s plan to pass legislation that would permit the installation of video lottery terminals at the tracks, a move that is being strongly opposed by casino supporters.

Casino lobbyists have been caught in the dilemma of saying that slots in Connecticut and Rhode Island have not had any negative impact on Atlantic City casino revenues yet are fearful that slots at the Meadowlands, Monmouth Park and Freehold raceway would cause them serious harm.

As for the tracks, they note that they currently face competition from Delaware and West Virginia where the tracks benefit from the slots, and soon will face more dire competition from Pennsylvania and New York tracks and possibly from Maryland.

Under the governor’s plan, the video lottery terminals installed at the tracks would be under the supervision of the New Jersey Lottery Commission.

N.Y. Summit

Frank Fahrenkopf, Jr., president of the American Gaming Association, will be the keynote speaker at the Second N.Y. Gaming Summit to be held Tuesday, April 22, at the Desmond Hotel and Conference Center in Albany, N.Y.

A number of subjects dealing with gaming in the Empire State will be discussed with some of the country’s leading experts in the gaming industry leading the discussions.

Among the subjects listed are: Legal and Regulatory Update; Project Status Update, Economic & Social Impacts of Gaming, Indian Gaming in N.Y., Here and Now; VLT Potential in New York, and Slots in the Northeast: The Nation’s Hottest Growth Market.

In addition to Fahrenkopf, speakers include: Mickey Brown, tribal consultant who previously played a major role in the development of Foxwoods Resort; Skip Carlson of the Saratoga Equine Sports Center; Marc Falcone, analyst for Deutsche Bank; John Kemp of Goldman Sachs, Sebastian Sinclair, Christiansen Capital Advisors; Joe Weinert of the Atlantic City Press, and Keith Whyte, National Council on Problem Gambling.

The event is being organized by GEM Communications LLC.

Saddam asylum?

Is Iraqi strongman Saddam Hussein planning to secretly leave his country two days before the bombs hit to flee to North Korea that has offered him asylum?

According to the South China Morning Post, Macau casino mogul, Stanley Ho, acted as the middle man in passing along the asylum offer from North Korea to the hard-pressed dictator.

The newspaper quoted Ho as saying, "We have to take any chance to have peace, especially if it comes in the shape of good news from the East."

The report gave no reason why Ho was chosen as the conduit for the North Korean offer other than to note that Ho opened a casino next to communist party headquarters in Pyongyang, North Korea in 1999.

"They told me," Ho said, "that there really was a chance to prevent a war, and said that Saddam Hussein could step down two days before the U.S. and Britain started to bomb and he could call for democratic elections."

But, by the time the story appeared in print, a North Korean consular official was denying the offer.

"The news report”¦was groundless," the official told The Associated Press. "The remarks made by Stanley Ho were not true. My country has never stated such a petition," he said.

Still no decision

The future of Casino San Pablo near Sacramento, Calif., remained unknown Monday as the members of the Sonoma County Lytton Band of Pomo Indians awaited the decision of a federal judge who is hearing a federal suit.

The suit was brought by a card club, Artichoke Joe’s, seeking a preliminary injunction to prevent the federal government from taking title to the casino and turning it over to the tribe.

A major problem developed during the trial when it was learned that the tribe is still not fully recognized by the federal government primarily because the tribe never completed the required steps to become organized as a tribe under federal law.

The judge did not indicate when he would rule.

Darn those butts

Business at some Australian casinos has plunged since they were forced to institute a ban on smoking. In fact, in Victoria, the casinos’ revenue is down about $25 million (Aus) per month.

Biggest hit apparently was being taken by the properties that offer just video poker machines. For the first five months after the September ban, the gaming venues, as they are called Down Under, were down $125 million and there were no signs that improvements were imminent.

Not only were the clubs being affected but so was the provincial government since tax revenue also was in decline. However, a gaming minister said that the imposition of the smoking ban coincided with an ongoing decline in machine revenue. He said the ban was only a one-year experiment and that results would be studied.

Slow February

Severe weather was blamed by many gaming officials for the drop in business in at least three states nationwide.

In New Jersey, Atlantic City casinos reported a decline of 12.8% in revenues with every property, except Harrah’s Entertainment Inc. (HET) experiencing the drop. Park Place Entertainment properties fell more than 12% while the Trump properties declined 13.4%.

Illinois’ nine operating riverboat casinos declined 5.2% in February with the most notable exception, Hollywood Aurora, benefiting from its $65 million barge conversion avoiding a drop during the period.

Iowa’s gaming regulators said the group of riverboat operators saw their revenues decline by 2.4% during February but that the racinos fell by 7.8%. Biggest drops were experience by Harrah’s properties, down 11.5% and the Isle of Capri riverboats down 1.9%.

A tax problem

Iowa Gov. Tom Vilsack has suggested the expansion of gambling as a means of resolving a tax dispute with the state’s racinos, the tracks with slot machines.

By court order, currently being appealed, the state must repay the tracks $112 million it collected in taxes while charging them 32% of revenues while holding a 20% tax on riverboat revenues. Also by dropping the tax to 20%, the state would lose about $35 million a year in future racetrack taxes.

Gov. Vilsack said he believed it would be in the best interest of everyone concerned if the tracks were to negotiate a settlement with the legislature. Some lawmakers are supporting a bill that would permit three more riverboat licenses and would permit more slots as well as table games at the racetracks.

The Insider

Officials at Pinnacle Entertainment Inc. (PNK) are showing their support of the company by buying shares with their personal funds. Chairman and CEO Dan Lee recently bought 2,200 shares at prices ranging in the low $4 range. Also pitching in was John Giovenco, who recently joined the company’s board of directors. He bought 20,000 shares at $4.63 a share.

Meanwhile, Standard & Poor’s Ratings Services assigned a "B+" rating to Pinnacle’s proposed $225 million senior secured bank facility.

Monarch Casino & Resort Inc. (MCRI) has announced plans to buy back up to 250,000 shares in the open market or through negotiated transactions.

VirtGame Corp. (VGTI) and its partner, Las Vegas Dissemination Company, have signed a sports wagering software licensing and maintenance agreement with Casino MonteLago, a casino that will be part of the Ritz-Carlton Hotel at Lake Las Vegas.

Isle of Capri Casinos Inc. (ISLE) has announced the promotion of Bob Griffin to regional vice president for the corporate office. He recently was vice president and general manager of the company’s property in Black Hawk, Colo.

Mikohn Gaming Corporation (MIKN) will announce its fourth quarter and full year earnings on Thursday, March 13.

Prudential Securities has raised its rating on Station Casinos Inc. (STN) to "buy" from "hold."

Supporters of jailed for Louisiana Gov. Edwin Edwards have begun a petition drive aimed at having President Bush reduce his 10-year sentence.