NJ Finds Compromise On Atlantic City TakeoverChristie Agrees With Plan To Control City's Finances For 5 Years |
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Atlantic City likely won’t be going bankrupt under a new plan announced Tuesday by New Jersey Gov. Chris Christie. For the past couple of years, officials have been scrambling to help save a city that has witnessed casino win fall from $5.2 billion in 2006 to just $2.56 billion last year.
Under the forthcoming legislation, which is a revision of previous proposals that Christie unexpectedly nixed, the state will be able to restructure the city’s debt, terminate municipal contracts and control other aspects of its finances. The state takeover of Atlantic City’s finances would last for a period of five years, as opposed to 15 years, which was previously considered, according to Reuters.
Atlantic City’s debt stands at $240 million, of which $160 million is owed to the Borgata in the form of a tax refund. Atlantic City said it has no way of paying that off.
In fact, the city might not have enough money to keep operating past the spring.
Four casinos closed there in 2014, bringing the number of resorts to just eight, though the state has a handful of online casinos, which have helped the city to the tune of $148 million in revenue last year. Online gaming should be given another lift at some point this year when PokerStars launches its product to Garden State residents. Current law in New Jersey says that online gaming operators have to be located within Atlantic City.
Online casino games were touted as a way to help Atlantic City, and they have, but the financial problems of the former no. 2 commercial gambling market in the country have proved more serious than most were saying back in 2013, when the state legalized the Internet games.
The most dramatic brick-and-mortar closing of 2014 was Revel’s, a casino which cost an Atlantic City record $2.4 billion to build. The state had to financially assist the project when it ran into difficulty. The casino has a new owner who has hinted at just leaving it empty indefinitely, or using it for Syrian refugees.
Christie’s plan, which the city council signaled its support of on Tuesday, also has the backing of the New Jersey Senate’s leading lawmaker. The Senate wanted a more complete takeover, so Christie’s plan is more or less a compromise, according to a report from The New York Times.
Just exactly how New Jersey will reduce Atlantic City’s spending is unclear.
A state takeover could still be too little too late. New Jersey lawmakers are preparing to let voters decide in November if casinos should be built in North Jersey. While it would be great news for the state, it could spell even more trouble for Atlantic City.
In 2014, Christie gave Atlantic City a five-year window to rebound before considering casinos elsewhere in the state, but he couldn’t wait any longer. Gambling expansion has picked up nearby, as Pennsylvania will soon see its 13th casino and New York late last year handed out three new casino licenses. New York said that its residents spend $1 billion each year at out-of-state casinos, a lot of which is in Atlantic City. Four new Empire State casinos could spell ever greater disaster for Atlantic City.
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