Christie's high-stakes gamble to renew A.C.

ATLANTIC CITY - The State of New Jersey pushed all of its chips to the middle of the table last week, a high-stakes gamble that it can spend its way to a remake and a revival of this beleaguered town.

The bet was made in the gray and biting cold of an Atlantic City winter and announced by Gov. Christie amid the unfinished construction of the $2.5 billion Revel Casino. That was symbolic, since Christie, architect of this recovery plan, said construction of Revel will be completed, putting 2,000 back to work.

The state is kicking in a so-called $261 million tax rebate disbursed over 20 years to cover infrastructure improvements in and around the Boardwalk casino. In return, the state gets a 20 percent stake in Revel management's ownership interest in the resort. Revel is the first luxury hotel/casino to be constructed here since the Borgata, the lone star in the faded Atlantic City gambling galaxy.

Atlantic City is already home to 11 casinos, but it is being battered by new regional competition: Three casinos in the Philadelphia area - Bensalem's Parx, Chester's Harrah's, and SugarHouse, on the city's Delaware River waterfront. A fourth casino, in Bethlehem, is siphoning north and central New Jersey gamblers with easy access on Interstate 78. Valley Forge could be the site of yet another casino.

Over six months, the Shore resort seemingly got whatever it wanted from Trenton. The attention includes putting sports betting on the November ballot, allowing Internet wagering - such as poker at computer servers at A.C. casinos - and building smaller, boutique casinos.

There is also help for the state's struggling horse-racing industry. A measure signed last week by Christie expands wagering options at New Jersey's four horse tracks. An existing casino subsidy essentially paid the tracks not to install video-lottery terminals. The eight-year subsidy ends in December.

"The governor knows you can't keep dumping money on something to get it to change," said Christie-supporter Jake Shak, 22, of West Philadelphia, as he grabbed lunch at the market-leading Borgata last week. "He calls it like he sees it."

But are the changes enough to overcome the surprising gaming juggernaut that Pennsylvania has become, just since 2006?

Some gaming analysts are not so sure gamblers will return to Atlantic City, despite state-driven improvements.

"This is all about convenience gambling," said John Kempf, of RBC Capital Markets Corp. "People will tend to stay closer to home.

"I expect Atlantic City will continue to decline in the near-term and will likely grow slightly as the economy opens and Revel drives some visitation," he said. "But we are talking about bouncing along the lows and not anything in substantial growth."

Analysts such as Kempf predict that expansions at Pennsylvania casinos, such as adding hotels, the Aqueduct racetrack's debut with slots in New York, and Delaware and Maryland casinos, will continue to weigh on the resort.

"Atlantic City needs a huge capital investment in attractions that will turn it into a tourist destination, not just a casino destination," said State Sen. Ray Lesniak, who sponsored several of the Trenton initiatives, including a November referendum to allow sports betting.

He said they were needed to salvage New Jersey's eroding gambling industry, down $1.6 billion in revenue and a loss of 7,500 casino jobs since 2006.

"These legislative initiatives by themselves aren't enough to stave off the competition," said the Union County Democrat.

New Jersey also confronts internal competitive pressures.

Lesniak and other North Jersey lawmakers have not given up on building a casino at the Meadowlands sports complex, or on adding video-lottery terminals there. Christie has publicly vowed not to expand gambling beyond Atlantic City, but the issue is not likely to go away, especially as New York's casino racetracks further steal North Jersey gamblers.

The Atlantic City casino lineup is uneven, and problematic.

Some of the bigger, mightier houses in town - Borgata and Harrah's - would rather not see Revel move forward, fearing it could eat into a shrinking revenue pie. Some speculate that Revel could even push some of the smaller, financially unhealthy casinos, like the Atlantic City Hilton, to close.

Also, a law passed last month, allowing for 200-room casinos instead of the mandatory 500 rooms that had been the threshold, that divided the casino community. Hard Rock International, eager to take advantage of the eased regulations, plans a $300 million casino on the southern end of the Boardwalk. That distresses casino operators who invested billions in Atlantic City to build 1,500-plus-room hotels and football-field-size gaming floors.

Christie, aware of South Jersey's political importance, said the changes were needed to encourage investment by making construction less costly and to make the regulatory process simpler.

The state last week laid off 115 of 144 casino inspectors, whose job had been to handle gamblers' complaints. The jobs go away March 25. The cuts, Christie said, are intended to eliminate redundant functions between the Casino Control Commission and the Division of Gaming Enforcement. They also allow the cash-strapped state to chop salaried positions.