Inside the NJ casino overhaul

As promised, I’ve taken a deeper look at the recent casino regulatory overhaul that passed the New Jersey legislature. My comments are based on version of the bill that was current as of 1/10/11. You can find it right here.

First of all, the bill codifies into law the current existential angst the industry is facing:

(18) As recognized in the July 2010 Report of the Governor’s Advisory Commission on New Jersey Gaming, Sports, and Entertainment, and as confirmed in subsequent legislative hearings held throughout the State, legalized casino gaming in New Jersey presently stands at a crossroads, facing critical challenges that jeopardize its important role in the State economy, and it is in the public interest to modernize and streamline the current outdated casino regulatory structure in order to achieve efficiencies and cost savings that are more appropriately directed to marketing and infrastructure improvement efforts while, at the same time, maintaining strict integrity in the regulation of casino operations.

(19) The ability of the legalized casino gaming industry in New Jersey to compete in an ever-expanding national gaming market requires a regulatory system that is sufficiently flexible to encourage persons and entities holding casino gaming licenses outside of New Jersey to participate in casino gaming in Atlantic City, to allow licensees to take full and timely advantage of advancements in technology, particularly in information technology, and business management, and to encourage the efficient utilization of resources between and among affiliated New Jersey licensees operating casinos located in Atlantic City and between and among a New Jersey affiliate and its licensed affiliates in other jurisdictions.

There are some small but interesting changes throughout the bill.

It broadens the definition of “family” to include domestic partners and partners in a civil union in addition to the traditional array of blood and marriage relations.

Non-cashable credits are explicitly defined as “not gross gaming revenue,” and therefore not taxable/

Adds a definition:

Multi-casino employee” – Any registered casino employee or licensed casino key employee who, upon the petition of two or more affiliated casino licensees, is endorsed by the commission or division, as applicable, to perform any compatible functions for any of the petitioning casino licensees.

Which suggests we’ll be seeing more cross-staffing in multiple-owner casino groups.

The bill changes virtually every mention of “commission” in the existing Casino Control Act to “division,” reflecting the big shift in regulation.

The bill gives the following responsibilities to the Division of Gaming Enforcement:

conducting investigative hearings on the conduct of gaming and
gaming operations and the enforcement of the casino control act;
issuing reports and recommendations to the commission on entities or persons required to qualify for a casino license, on applications for interim casino authorization, or on petitions for a statement of compliance;
examining records and procedures, and conducting periodic
reviews of operations and facilities, to evaluate provisions of law;
collecting certain fees and assessments;
issuing operation certificates to casino licensees;
accepting impact statements submitted by casino license applicants;
issuing emergency orders;
taking action against licensees or registrants for violations of the act;
imposing sanctions and collecting penalties;
accepting and maintaining registrations for casino employees and certain vendors;
receiving complaints from the public;
certifying the revenue of a casino or simulcasting facility;
creating and maintaining the list of excluded patrons;
and
using private contractors to process criminal history record background checks.

The Commission still actually issues licenses and hears appeals on Division decisions. One notable change: neither DGE agents nor Commission inspectors will have to be present in casinos anymore. I wonder what they’ll do with the CCC podiums in the casinos. Taking a cue from Vegas casino party pits, I suggest “cage dancers.” Bonus points if they dress in Commission garb before stripping it off. Extra bonus points if a patron interrupts their dance to file a dispute.

The Commission also loses the right to have an in-house legal counsel, and instead has to contract that work out.

The Division’s office must be in Atlantic City, although it’s allowed to have a secondary office in Trenton, too.

The amount of fines are doubled.

From its signing, the CCC has 90 days to make an “orderly” transfer of its powers to the DGE.

The moves will have a definite fiscal impact, but according to the fiscal estimate, the exact impact can’t be determined yet. The Office of Legislative Services offers some good reasons why:

It should be noted that estimating the cost or possible savings to the Casino Control Fund resulting from the transfer of various regulatory functions from the CCC to the DGE would require the Executive Branch to provide a strategic reorganization plan that details the functions and regulations being transferred and any changes in scope and importance of those functions and regulations. In addition, an estimate of the costs or savings would require the Executive Branch to provide a workload analysis describing how the functions that are transferred will be handled by the DGE in terms of staffing and position restructuring. For example, will the DGE hire new employees to perform the transferred functions, will the existing DGE staff absorb the new job duties by having their job duties expanded to include the new functions, or will some functions be eliminated entirely? Furthermore, because the bill changes the language in current law requiring the DGE to be principally located in Atlantic City, will the State incur new building or facility costs?

In other words, it’s anyone guess how all this will play out. It could save money, but it might cost money in the short term.

3 Responses to 'Inside the NJ casino overhaul'

  1. dave202 says:

    Interesting, thanks for the analysis. I thought there was a compromise suggested last week that the CCC could have in-house counsel, but you have sniffed that out. Sounds like boom times for the AC gaming lawyers.

    The doubling of the fines is interesting too. Never realized that.

    I didn’t see anything about the gaming lab. I guess that remains untouched. That could be a tremendous saving!

    And I love the idea about cage dancers!

  2. Jenn says:

    I like the idea about the conversion of the CCC booths, lol!

  3. FoolsGold says:

    Cost? Fines? Inhouse Counsel?
    The issue is the POWER of the body and the manner in which the agency has the ability to wield that power.
    If CCC agents no longer have to be on premises for the casino to be open, the power is substantially weakened.
    This just creates yet another agency that can’t enforce without hearings and lawyers and delays and appeals and worries about its budget.
    Is the agency an independent body with clout or is it a bureaucratic rubber-stamp?