New Jersey Senator says Caesars buyout of Revel would be illegal

2014-01-31

Reading time 2:29 min

(US).- New Jersey State Senator Jim Whelan wants regulators to prevent the world’s largest casino company, Caesars Entertainment, from – illegally, in his view – adding to its portfolio in Atlantic City. Caesars, which controls Showboat, Harrah’s, Bally’s, as well as the company-named Caesars property in Atlantic City, is said to be in talks to purchase Revel, a casino that opened to great fanfare less than two years ago but found itself bankrupt within a year. “The reality is, Caesars just bought the Atlantic Club and closed it when there were other parties willing to keep it open.This is bad for the region. It’s bad for Atlantic City, and more importantly, it’s against the current law,” Whelan said.

Late last year, officials with Revel said that they were open to the idea of selling the property, which has been working to turn a profit amidst a difficult economic climate in the once-glorious east coast gaming capitol.

State Senator Whelan, long a supporter of the Garden State’s gambling industry, and a backer of a new bill that, if passed, could render New Jersey an international online gambling hub, said that he was “extremely troubled” by the idea of Caesars taking over the newest land-based casino property in Atlantic City, a gaming center that in recent years has struggled in the face of ever-increasing pressure for gamblers from nearby states, most notably Pennsylvania.

Last November, a constitutional amendment was passed in New York, a state from which New Jersey draws a hefty number of gambling-based tourists, that will see the eventual construction of seven new brick and mortar casino properties in the Empire State. That development could serve to further depress the casino economy in Atlantic City, which has seen revenue drop every year since hitting its peak back in 2006.

The reason that Whelan believes that a Caesars takeover of Revel would not be legally sound is because the state has in place a law forbidding “undue economic concentration”, meaning that any one gambling company is forbidden from controlling too many casino properties within the Atlantic City area.

James Whelan has expressed his concern to casino regulators and Gov. Chris Christie’s office that the potential sale of Revel Casino Hotel to Caesars Entertainment would violate a provision of New Jersey law prohibiting one company from owning too much of the casino market.Neither company would comment.

Revel is considering selling itself, or making a second bankruptcy filing.Whelan said allowing Caesars Entertainment to own a fifth casino in Atlantic City would violate a section of the Casino Control Act, the state law governing casino gambling, prohibiting “undue economic concentration” of the casino market in any one company’s hands.

“I think it would be against the law, and I don’t think it would be good for Atlantic City,” Whelan told The Associated Press. “Caesars already owns 40 percent of the market, and they just bought and closed the Atlantic Club.

“The whole idea is to have various different owners in the market, with diversity in Atlantic City, and not have the market dependent on the rise or fall of one particular company,” Whelan said. The law does not specify a set number of casinos or a percentage of the market that cannot be owned by a single company.

Gary Thompson, a spokesman for Caesars Entertainment, would not comment other than to say, “we don’t comment on rumors or speculation.”
Revel, which cost us$2.4 billion to build, filed for bankruptcy after less than a year of operation. It emerged from Chapter 11 protection last year, but continues to struggle to gain market share. The casino said last year it is considering “strategic options” including a potential sale or a second bankruptcy filing.