Vol. 4, No. 6, June 2007
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Never Again
Our customers need assurances there will be no more July shutdowns of our industry
Wednesday, July 5, 2006 is a day we will always remember. On that day, our casinos were closed by order of the state, victims of the budget impasse between the governor and the legislature. It was the only time in our industry’s 28-year history that we were forced to close in this manner.
While we knew it was a difficult budget process, none of us thought that our casinos would be scarred by the battle. After all, why would a state that is in severe fiscal crisis close a business that generates millions of tax dollars every day, particularly when the state employees in question—the Casino Control Commission inspectors—are paid by our industry?
We were forced to close for three days in the heart of our busy summer season as the state chose to declare that 100 or so CCC inspectors should be furloughed, along with 45,000 other state employees who were also determined to be “non-essential.”
Since casinos cannot lawfully function without the oversight of CCC inspectors, our privately owned casinos were forced to close. While the efforts of CANJ and a ruling by the CCC permitted the casinos to remain open through the 4th of July weekend (the state had closed effective July 1), we were forced to close on July 5. This was devastating to our industry and those who benefit from it.
The decision to shut down the casinos proved especially difficult for our furloughed employees, who lost approximately $10 million in wages and tips. Additionally, the state lost approximately $1.3 million per day in casino revenue taxes, not to mention all of the other taxes (sales tax, room tax, payroll tax, CRDA tax, parking tax, etc.) that are tied to our businesses. New Jersey’s senior citizens also suffered a decline in their casino tax-funded prescription drug plan. And, of course, our businesses lost millions of dollars of revenue.
Our customers, without whom there would be no casino hotels or jobs, were forced to endure this unplanned hardship as well. In a typical July, casino hotels consistently operate at capacity. During the shutdown, occupancy declined to less than 50 percent.
The shutdown also translated into business reductions in our retail, restaurant and entertainment businesses, all of which are dependent on the casinos to drive volume. The industry’s supporting vendors and contractors also suffered economic losses.
The Philadelphia Inquirer reported the results of an online survey by the national market research firm Harris Interactive released last July that found that 13 percent of gamblers who had made specific plans to head to Atlantic City on the dates of the shutdown went to Connecticut casinos instead (Foxwoods and Mohegan Sun), 3 percent went to Delaware racinos, and 3 percent went to Las Vegas. About half—49 percent—simply stayed at home.
Aside from these short-term impacts, CANJ’s key concern was the shutdown's lasting effect. First, the shutdown deviated from New Jersey’s longstanding and well-deserved reputation as a stable environment for casinos to invest and conduct business.
Another concern is that our customers who were inconvenienced last July, and those who heard about the shutdown, may choose not to chance another shutdown this upcoming July unless there is an assurance that the casinos will not be forced to shut down again. We believe that the only assurance that will be effective is a law to prevent another casino closure.
We have asked that such a law be passed since last July, immediately after the shutdown ended. And while there have been different bills that have been proposed to address this issue, here we are in June as our customers make their plans for this July 4, and no version of this legislation has been passed.
We must continue to press for legislation that would make it impossible for us to be subject to such a closure again. CANJ has sought the support of both houses of the legislature and the governor to pass such legislation, and we urge each of you to support this effort by communicating with legislators and the governor to request their support to establish this law.
A supreme injustice was thrust upon our industry and upon all who benefit from our industry when we were forced to close our casinos last July. CANJ continues to work diligently to address the industry’s concerns moving forward. We ask for the support of each of you in our efforts as well.
